Desmond to cross Datalex 30% threshold under € 25m share sale
Datalex, the retail software provider for airlines, on Friday launched a € 25million capital raise as it seeks funds to repay costly loans from its largest shareholder, the man Dermot Desmond business, and ensure that he has sufficient working capital.
Mr. Desmond’s IIU investment vehicle, which owns 29.8% of Datalex, is participating in the capital increase insofar as it will see its stake increase to around 40%, exceeding the 30% threshold that would normally require the billionaire to make a full offer on the company according to stock market rules.
However, the Irish Takeover Panel granted Mr. Desmond a waiver, subject to approval by the other shareholders at an extraordinary general meeting.
Fundraising is planned in three stages. First, IIU and another shareholder, Pageant Holdings, and its founder, Nick Furlong, have committed to buy 14.7 million euros of new shares in a so-called cornerstone placement. Meanwhile, Datalex’s corporate broker, Goodbody Stockbrokers, sold € 4.2 million of shares to stock market investors in a corporate placement on Friday.
The third element will include a € 6.1 million “open offer” sale of shares to existing investors over the next three weeks. Mr Desmond and Mr Furlong will subscribe to some of those shares, while Goodbody found conditional buyers on Friday for the rest, in case demand from existing shareholders is not enough.
Mr Desmond’s Tireragh vehicle provided Datalex with € 11.3 million in emergency loans in 2019 as the company faced the fallout from an accounting scandal.
It accepted an additional € 10 million debt facility last year, but Datalex did not need to withdraw it. The existing loans, which bear an interest rate of 10%, mature in September 2022.
Datalex said it plans to use most of the 23.7 million euros of the net proceeds from the capital increase to repay the Tireragh loans, which, together with accrued interest, now stand at around 16 million euros.
The balance of the funds will be used for “working capital financing to support the implementation of new income opportunities and an acceleration of the company’s investment in its product roadmap,” he said. .
Datalex’s revenue fell 38% to $ 28.1 million (€ 23.2 million) last year, when the company’s airline customers suffered their worst year on record as Covid- 19 has practically stopped international travel. Airlines use Datalex software to manage airline ticket sales and prices, pay seat and baggage fees, and make car, hotel and insurance reservations.
However, the company said when announcing its 2020 results in April that it saw a growing pipeline of potential work as airlines began to plan for a post-Covid world.
“Today marks an important step for the group. We are preparing for the next step towards growth, and it is important that the group has the right capital structure in place for this phase, ”said Managing Director Sean Corkery. “While 2021 remains a difficult time for the airline industry, in recent months we have seen an increase in potential opportunities.
By strengthening our balance sheet and raising additional working capital, the group is in a much better position to take advantage of these opportunities. “
Datalex plans to move its shares from the main Euronext Dublin market to the junior Euronext Growth market, which will reduce administrative and regulatory requirements and also allow the company to avoid having to produce a prospectus to complete the capital increase.