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Where next as Webjet upsizes its equity raising to $346 million

We examine the details and consequences behind Webjet’s recently announced equity raise.

Webjet share price Source: Bloomberg

Webjet share price and an ever-evolving market

Investors have known for some time that Webjet (WEB) was set to tap the markets for fresh capital: they simply didn’t know how much the company was looking to raise, on what terms or how the market would respond.

Yesterday and today the market got a better idea – with the beleaguered travel company announcing the details behind a $275 million equity raise – comprised of an institutional and retail entitlement offer.

That picture became slightly modified today however, with Webjet announcing that it had successfully completed the institutional side of its planned entitlement offer and institutional placement; raising $231 million in the process and issuing 135.7 million new shares – at just $1.70 per share.

Those ‘institutional shares’ are set to be issued on 14 April and be tradable on the same day.

Management commentary in focus

In response to this news, Webjet’s Managing Director, John Guscic today said:

'We are delighted with this strong demonstration of support from both our existing and new investors. This equity raising provides Webjet significant liquidity to navigate the near-term uncertain created by COVID-19, and importantly positions us to continue our leadership in our global WebBeds business and Australian OTA.’

Mr Guscic continued by arguing that Webjet provides:

'An essential distribution channel in the travel sector and anticipate we will play an even more valuable role connecting our clients and hoteliers in a recovering environment.'

Yet maybe most importantly, the company today revealed that with the 'Entitlement Offer now fully underwritten with the retail component of the Entitlement Offer expected to raise $115 million and together with the Institutional Placement and Entitlement Offer,’ Webjet is now anticipating that it will raise approximately $346 million – some $71 million higher than initially flagged.

Though management and institutional players have reacted positively, other market participants appeared less enthusiastic when the stock resumed trading this morning. Here, the Webjet share price was bid as much as 30% lower when it exited its suspension.

The stock did however rebound as the session progressed: As of 12:43 AEDT, Webjet traded at $3.140 per share – well ahead of its intraday low of $2.59 per share.

Webjet’s Retail Entitlement offer is set to open on 8 April.

How to trade travel and airline stocks

With Webjet now in a stronger financial position, are you bullish or bearish on the company’s prospects? Either way, you can trade Webjet and other travel and airline stocks – long or short – through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) Qantas using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘QAN’ or ‘Qantas’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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