Deal: King & Wood Mallesons (KWM) has advised Flight Centre on its $700 million entitlement offer and institutional placement. 

The raise comprises a $282 million institutional placement and a $419 million 1-for-1.74 accelerated pro-rata non-renounceable entitlement offer and takes advantage of COVID-19-related relief made available by ASIC and ASX.

Value: $700 million.

Area: Private equity.

Key players: The team was led by national head of restructuring Tim Klineberg and M&A partner Paul Schroder with support from senior consultant John Humphrey, head of public M&A David Friedlander, special counsels Amanda Isouard and Gavin Rakoczy, senior associates Shabarika Ajitkumar, Mark Vanderneut and John Arthur, and solicitors Stacey Stellatos, Georgia Feltis, Stephanie Rigg and Jing Wang.

Deal significance:  Travel agency Flight Centre (ASX: FLT) is set for a significant dilution of ownership as it looks to raise $700 million in extra capital.

With total transaction value (TTV) sitting at 20-30 per cent of normal levels in March and further declines expected for the coming weeks due to travel restrictions, the Brisbane-based company is prepared to almost double the amount of shares on offer to stay afloat.

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A combined M&A and restructuring team advised Flight Centre on the equity raising and other aspects of its COVID-19 response.

Commenting on the deal Mr Klineberg said: “With the capital raising and new funding announced today, Flight Centre is positioned to overcome the COVID-19 pandemic and the travel and trading restrictions imposed by governments that are impacting the travel sector. It has been a privilege for our team to support Flight Centre to achieve this result.”

Further commenting on the capital raising, Mr Schroder said: “The combination of these initiatives is expected to ensure Flight Centre can trade through an extended period of uncertainty and disruption, can continue to deliver high-quality travel services to customers and can capitalise on opportunities as market conditions improve.”

Flight Centre went into trading halt on the ASX on 19 March 2020 and on Tuesday outlined full details of its response plan to COVID-19 of which the capital raising is an integral part. Flight Centre also secured a $200 million extension to its debt facilities (advised by Allen & Overy’s banking team).

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