Equity Capital Markets Case Study

Freeths’ equity capital markets team, based in our London office, advised AIM-quoted corporate client Hangar8 Plc on an all-share merger transaction implemented by way of reverse takeover, to form Gama Aviation Plc, which on completion was re-admitted to the AIM market with a market cap in excess of £120 million.

Our client

Hangar8 Plc was an operator of private business jet aircraft, based at Oxford Airport. Since its IPO in 2010 it had grown its fleet to comprise a significant number of heavy long-range jets under management. The management team had been exploring various routes to further expansion of the business whilst at the same time affording some of the founding shareholders and investors the opportunity to realise some liquidity from their investment in the business.

The deal

Through a personal contact of one of the Hangar8 non-executive directors, discussions were entered into with Gama Aviation, an established and geographically diverse player in the market. Freeths assisted Hangar8’s Chairman and his board with handling preliminary discussions, due diligence enquiries and the negotiation of a detailed heads of terms document.

Once the heads of terms was signed and the transaction process commenced in earnest, our team collaborated closely with the parties and their various professional advisers including the Nomad (Cantor Fitzgerald Europe) and other financial advisers Jefferies, Grant Thornton and Deloitte. The main work stream for us was the drafting, verification and co-ordination of the admission document in respect of the enlarged group, which was required to be done to the same thorough standards as would be the case with an initial public offering (IPO).

How we added value

The structuring of the transaction required also us to navigate various complex legal and regulatory issues commonly encountered on reverse takeovers of this nature including: liaison with the Panel on Takeovers & Mergers in relation to a ‘whitewash’ under rule 9 of the City Code on Takeovers & Mergers; regulatory requirements of the UK Civil Aviation Authority in respect of the ownership of the enlarged group and its operating approvals; and a pre-transaction corporate re-organisation of the share capital of the target. In addition, our specialist tax and employee incentives colleagues were able to provide valuable input on certain aspects of the structure in order to mitigate the tax impact of the transaction.

A key component of the transaction was a placing of new shares in the enlarged group with new and existing institutional investors, in order to raise funds of approximately £23 million, which was used to provide working capital for the company’s business and also to fund a partial exit for certain of the Hangar8 shareholders. Our team handled the negotiation of the placing documents with the Nomad / broker and its lawyers in parallel with negotiating the acquisition documentation with the target and its advisers.

Our cross-office team of lawyers, led by London head of corporate Tom Rowley, worked to a very tight timescale and overcame numerous logistical challenges in order to enable the deal to be announced to the market and completed on time and within budget and with the overwhelming majority of shareholders in support.