Selective And On Market Buy-Backs Of Ordinary Shares

Webjet Limited (Webjet) is pleased to announce proposed selective and on-market buy-backs of its ordinary shares.  

Capital management objectives

As previously advised to the market, the Board of Webjet has been considering a number of alternatives as part of its overall capital management programme.

Within that programme, the Board has set for itself the capital management objective of utilising some of its available cash reserves to create a more efficient capital structure so as to better position Webjet to make distributions of income on a consistent and sustainable basis to its shareholders in the future].

The Directors believes that restructuring of the Company’s capital represents a priority call on the Company’s resources rather than short term dividend payments.  Over time and as business circumstances permit, a reduction in the total number of issued shares will result in a capital structure that can sustain future dividends on a reasonably consistent basis, subject, of course to the financial performance, capital requirements, business objectives and prospects of the Company in the future.

Selective buy-back

Webjet has entered into an agreement to selectively buy-back 27,299,446 shares, representing approximately 8.4% of the issued capital, currently held by GIW Holdings CV (GIW). 

The agreement follows your Directors becoming aware that as a result of a change in its business plans, GIW wished to sell its holdings in the Company.  In preference to that large parcel of Webjet shares being disposed of on market, where it could potentially have the effect of depressing Webjet's share price, to the detriment of all Webjet shareholders, and consistent with its capital management objective, Webjet proposes to buy back GIW's shareholding and has entered into a selective buy-back agreement with GIW to this effect.  Despite divesting of its shareholding in Webjet, Galileo continues to have a strong relationship with the Company as a key technology provider.

The selective buy-back agreement is subject to a number of conditions precedent.  These conditions include:

• DMR Corporate Pty Ltd, an independent expert engaged by Webjet (Independent Expert), issuing a report to the effect that the buy-back is fair and reasonable to Webjet's shareholders as a whole (within the meaning of section 256B(1)(a) of the Corporations Act 2001 (Cth) (Corporations Act); and
  
   
• a special resolution (Resolution) being approved in a general meeting by Webjet shareholders, authorising Webjet to purchase the Buy-Back Shares in accordance with the terms of the selective buy-back agreement and s257D of the Corporations Act.

Under the selective buy back agreement, Webjet will pay to GIW, in consideration for each bought-back share, the lesser of:

• an amount equal to 90% of the volume weighted average sale price of Webjet shares traded on ASX in the 30 trading days immediately preceding (but not including) the date that Webjet shareholders approve the Resolution; and
  
   
• 32 cents.

Based on the price of the Company’s ordinary shares on ASX on, for example,

10 April of 32 cents, the selective buy-back of GIW's 27,299,446 million ordinary shares will cost the Company approximately $7.9 million.

Subject to the Independent Expert concluding that the selective buy-back is fair and reasonable to shareholders, a general meeting to approve the selective buy-back is proposed to be held on or around 7 June 2007.

The Directors unanimously recommend that Webjet shareholders vote in favour of the special resolution to approve the selective buy-back, subject to the Independent Expert concluding that it is fair and reasonable to shareholders.  All Webjet Directors intend to vote all of the Webjet shares they hold or control in favour of the special resolution to approve the selective buy-back, subject to that same qualification.

On-market buy-back

Consistent with the above, the Directors have also approved Webjet commencing an on-market buy back of up to 14,853,171 ordinary shares in Webjet representing up to 5% of the Webjet's issued shares (calculated on the basis of current issued capital less 27,299,446 GIW shares).

It is intended that the on-market buy back will be structured such that Webjet will be able to buy back its shares on-market at any time on and after 10 June 2007 (so as to coincide with completion of the proposed selective buy-back described above).  It will continue for 12 months (subject to any earlier fulfilment of the 5% buy-back limit).  Based on today’s share price, this would represent a buy back cost of approximately $4.5 million to the Company.

The Company currently has 324,362,858 ordinary shares on issue.  On successful completion of the on-market and selective buy-backs described below, the total issued capital will be reduced to 282,210,241 shares.

The Directors do not believe that the proposed buy-backs will have any material adverse effects on the prospects of the Company.  As at 31 March 2007 Webjet had cash reserves of $27.6m and with Webjet forecasting that, if it was not to proceed with the selective and on-market buy-backs, its cash reserves at the end of the current financial year would be likely to exceed $29m, it has more than adequate resources to undertake the buy-backs.

Webjet continues to examine potential strategic acquisitions consistent with previous advice and further notes that dividend policy will be advised to the market on 16 April with 9 months profit guidance.