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 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

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.