Gama Aviation to delist from AIM

Gama Aviation

UK business aviation services company Gama Aviation unveiled plans to delist from the junior stock market: the Alternative Investment Market (Aim).

Under the delisting plan, the company has proposed to return up to £32.6m to shareholders by way of a tender offer at 95 pence per ordinary share capable of acceptance by all eligible shareholders.

The company said that the legal and regulatory burden associated to trading on the AIM is disproportionate to its benefits. In addition, with average daily volume over the past 12 months of approximately 14,900 shares (0.02% of the issued share capital), the company said that the costs associated with maintaining the AIM quotation are high and could be better utilised. The company has not raised any fresh capital from AIM since 2018.

Gama Aviation announced delisting plans through a circular issued to shareholders. The plans will be considered by the company’s board at the general meeting scheduled to be held on May 15th, 2024.

Earlier in February this year, the company announced capital return worth £16.5m in view of its current and near-term working capital requirements. It had said that any increase in the size of capital return would reduce funds available for capital requirements.

Gama Aviation previously operated a US Maintenance, Repair and Overhaul (MRO) Business. They sold this MRO in October 2023 and announced they would return a portion of the proceeds from the sale to shareholders.

Since they were no longer receiving the operating cash flow from the MRO business, the Board had to carefully consider how much capital they could return to shareholders while still meeting the working capital needs of the remaining business and funding their strategic goals. This is why the initial offer to buy back shares was limited at £16.5 million.

However, two of the company’s top shareholders including Marwan Khalek and Bermesico agreed to undertake not to tender any of their ordinary shares in order to help the company retain funds to meet the investment capital requirements of these strategic projects.

Following this, Gama Aviation’s board decided to accelerate the return of capital to shareholders and increase the amount to be returned in the short term to shareholders up to £32.6m.

The continuing group is currently loss-making and experiencing cash outflows. They reported $74.3m in revenue and an adjusted EBIT loss of $0.6m for H1 2023. While FY2023 revenue is expected to be around $145m, margins have been impacted by inflation and supply chain issues.

However, the company forecasts growth driven by new contracts. The Wales Air Ambulance contract is expected to generate £65m over seven years, while oil and gas contracts are expected to deliver £130m over five years. Additionally, the Specialist Aviation Services acquisition is expected to add £27m annually in revenue.

The company acknowledges negative cash flow in the near future and said it is prioritising long-term growth through investments. 

However, the company expects the de-listing from AIM will generate savings.

Timetable for principal events for delisting:

• April 29th, 2024: Announcement of tender offer and delisting. 
• May 15th, 2024: General Meeting
• May 23th, 2024: Last date for receipt of Tender Forms and settlement of TTE Instructions
• May 30th, 2024: Last day of dealings in the Ordinary Shares on AIM
• May 31st, 2024: Cancellation of admission of the Ordinary Shares to trading on AIM