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Strengthen balance sheet and funding potential acquisitions

gategroup plans capital increase

The Board of Directors of gategroup Holding AG, the leading independent global provider of products, services and solutions related to a passenger’s onboard experience, is proposing that shareholders approve a capital increase. The target proceeds of approximately CHF 200 million will serve to strengthen gategroup’s balance sheet and fund the company’s growth strategy.

gategroup intends to capitalize on the continued long-term trend of passenger growth in the airline industry, which is expected to expand rapidly in certain emerging markets. “In the arc of our corporate development – from restructuring in mid-decade to the acquisitions that formed gategroup to our listing last year as a publicly traded company – the next natural step is a capital increase,” said gategroup CEO Guy Dubois.

“The proceeds will provide gategroup financial flexibility by allowing it to strengthen the equity position of the balance sheet and by raising funds to execute on attractive merger and acquisition opportunities.”

Dubois said gategroup wants to be positioned to profit from organic growth as well as from opportunities arising from airlines seeking to outsource their non-core activities. The company also wants to pursue suitable opportunities to gain additional footholds in high-growth areas such as the Middle East and Asia Pacific regions.

“Increasing shareholder value is the goal and a capital increase will provide the fuel to get us there faster,” he said. Dubois added that gategroup’s outlook for a 2010 EBITDA margin of close to 8% with continued strong operating cash flow remains unchanged.

Subscription rights of existing shareholders will be protected in the capital increase, which is intended to be based on an “at-market” rights offering. Any shares not taken up by existing shareholders will be offered to new investors by way of a public offering in Switzerland and private placements to new institutional investors in additional jurisdictions. Credit Suisse has been appointed Sole Bookrunner for the transaction, with Goldman Sachs acting as Joint Lead Manager alongside Credit Suisse. The capital increase is subject to approval by the general meeting which is to be held on Oct. 26 2010.

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