Silverjet in takeover talks with three bidders

Published on Saturday 3 May 2008 14:56

LAWRENCE Hunt, the chief executive of business class-only airline Silverjet, has said he is in takeover talks with three bidders after securing a £12.6m lifeline for the beleaguered airline.

The last business class-only airline flying from Britain has seen its value plummet from 80m to just 11m as it has struggled to compete with the major airlines which offer greater frequency of services, air miles and departures from principal airports.

Hunt would not reveal the identity of the would-be bidders but ruled out the Middle Eastern investor who last week took a 28% stake in the firm.

It is understood that airlines and wealthy individuals are among the interested parties.

The most likely option is thought to be the Reuben brothers, the billionaire investors who loaned the company 10m in December.

The brothers, David and Simon, declined to convert their holding into shares by the February deadline because the share price fall in the intervening months left the stock well below the price at which they bought in.

Speaking to Scotland on Sunday, Hunt said there are three other parties that have indicated an interest in buying the company, and a bid for the airline could come within the next couple of months. He said: "There are other parties at the table at the moment who we are in discussions with about the possibility of making an offer for the company."

Speculation that the company is destined to follow the path of rivals Eos and MAXjet has been rife as it struggles to deal with rising fuel prices. Hunt also admitted that it had failed to reach profitability in March.

Silverjet, MAXjet and Eos started business-only services from London to New York in 2006. But they have struggled as fuel costs have risen and they have not sold enough seats.

Michael Stoddart, an aviation analyst at Daniel Stewart & Co, which this year slapped a "nil" price target on Silverjet, said: "Three months on from our initiation note on Silverjet, when we set a zero target price and said they would need fresh equity, we are a lot closer to zero and the company is seeking fresh equity. It is an admission that things are considerably worse then they had previously admitted to."