Datalex, the airline travel retail software provider, said it is exploring “all financing options” to refinance loans under a €10 million facility from major shareholder Dermot Desmond after the businessman agreed to extend the due date of debt but hike interest rates.
Mr Desmond’s Tireragh vehicle has pushed out the repayment date on loans under the facility, which amount to €9 million, by 18 months to the end of next year. However, the interest rate on the loans has been increased from 10 per cent a year to 15.5 per cent with immediate effect and will ultimately rise to 18 per cent from October, said Datalex in a statement.
Debt drawn down from the facility from Tireragh was originally due to be repaid in late 2021, but the term was subsequently extended. Mr Desmond’s IIU Nominees company also owns 40.5 per cent of Datalex.
Datalex, led by chief executive Sean Corkery, said it has engaged financial advisers “to explore further fundraising options to secure capital to repay the debt facility and support the expansion of the business as it returns to positive cash flow generation and further builds out its global customer base”.
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A spokeswoman for the company said that Goodbody Stockbrokers is advising. It is understood that equity and debt options are being considered.
Plans to raise new funds come at a time when the company is searching for a new chief financial officer after Dan Creedon said he would be leaving the business at the end of June.
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It also comes less than five months after the company downgraded its earnings forecast for 2022, saying an anticipated recovery of business in China had failed to materialise, due to lockdowns in key cities. China has since lifted travel restrictions.
The company said that it plans to hold a capital markets day on May 10th for investors and analysts, where it will outline how it expects to grow its business amid recent new customer wins and other potential opportunities for a business that was rocked by an accounting scandal in 2019, triggering a management overhaul and deep restructuring, and the Covid-19 pandemic.
Datalex has won large new contracts from Virgin Australia and Easyjet in the past 16 months.
The company had previously raised €25 million in a share sale on June 4th, part of the proceeds of which were used to repay over €16 million of previous debt, including interest, owed to Tireragh.
The original borrowings from Tireragh were essentially rescue loans as Datalex sought to stabilise itself following the accounting irregularities uncovered four years ago, which largely stemmed from how it recorded revenues from a Lufthansa contract. That contract was subsequently terminated, resulting in litigation from both sides, much of which is ongoing.
