Pacific Equity Partners, a Sydney-based buyout firm, has reached a preliminary agreement with the board of Australia-listed Flight Centre on a joint venture that will allow it to take a 30 percent stake in the travel agency – just a few months after a failed take-private bid.
“The in-principle agreement means that Flight Centre and PEP will now proceed to negotiate and finalise an Implementation Agreement as soon as possible,” Flight Centre said in a filing with the exchange.
Under the latest proposed transaction terms, shareholders of Flight Centre will effectively retain an initial 70 percent interest in the unlisted joint venture – a stake that will be trimmed to two-thirds if certain targets agreed upon by the proposed transaction are met.
Flight Centre said it: “expects to receive about A$1.1 billion in cash proceeds from the transaction, to be sourced from debt facilities entered into by the joint venture and the amount paid by PEP ($195 million) in acquiring its economic interest.”
A substantial part of the proceeds – which will be a combination of cash and tax credits – will be returned to shareholders via an off-market share buy-back, structured along similar lines to that proposed during the previous privatization proposal, according to the filing.
Rob Koczkar, a managing director at Pacific Equity Partners, said: “Shareholders will be given the opportunity to either exit their investment for cash or take a cash proceed and retain their investment in Flight Centre alongside PEP in the new structure.”
However, Flight Centre said the proposed sale to the joint venture “will not be conditional on the outcome of the scheme of arrangement to facilitate the subsequent off-market buy-back of FLT shares.”
The company added that the scheme would be subject to a resolution passed by 75 percent in value and 50 percent in number of those voting at a forthcoming shareholder meeting.
Pacific Equity Partners’ earlier privatisation attempt was blocked by Lazard Asset Management, which controls more than 25 percent of Flight Centre’s shares.