Datalex, the retail software provider to airlines, said on Thursday it plans to carry out a share sale to repay €13 million of high-cost loans from its main investor, Dermot Desmond, and secure working capital to invest in growing the business.
Market sources estimate that Datalex will seek to raise as much as €30 million in the second half of this year.
However, Mr Desmond, who has provided loans through his Tireragh Limited vehicle, has offered to extend the term of the loans by six months to July 1st, 2025. He will provide a new €10 million facility, if needed, should the equity raise not be completed. The loans carry an 18 per cent interest rate and some €1.9 million of interest was owed as of the end of last year.
The billionaire owns about 41 per cent of Datalex and has been a consistent provider of loans since the company was rattled by an accounting scandal five years ago.
He has committed that “he will procure support for the planned equity fundraising” and participate in it to keep stake at the same level, Datalex said in its annual report.
The extension and offer of additional loans as a backup plan has allowed Datalex, which has been led since late last year by Jonathan Rockett, to sign off on its accounts on a going concern basis. This essentially means the company has the funding to remain in business for at least the next year.
Datalex confirmed in its annual report that its revenues grew by 23 per cent last year to $29.8 million (€27.8 million), while its losses before interest, tax, depreciation and amortisation narrowed to $2.9 million from a $5.3 million shortfall for 2022, it said in a trading update. It had previously disclosed headline results in March.
“With the support of the largest shareholder the balance sheet issues look like they will be resolved in the near term,” said Dudley Shanley, an analyst with Goodbody Stockbrokers. “Overall, we view the update as a step forward for Datalex.”
Shares in the company rose as much as 1.8 per cent in Dublin, giving it a market value of €60.8 million.
Last year had been something of a turnaround for the global aviation industry as passenger traffic volumes further recovered and airlines continued to invest in their ecommerce technology.
Datalex announced partnership renewals with Air China, Air Transat, JetBlue, Edelweiss and Aer Lingus last year, with some of them signing up to the company’s newest platform products.
However, Virgin Australia scrapped a plan to overhaul its retail offering which hit Datalex and a number of other companies. In addition, Scandinavian airline SAS filed for bankruptcy protection last July, resulting in them not proceeding with a Datalex product. Some $3.5 million of revenues booked from these two customers last year will not be recurring in 2024.
Datalex also signed a contract with LatAm Airlines last year. However, it said both sides have decided that while the project “achieved its primary endpoints” this month, both sides have agreed not to proceed further.
“We derived significant value and insight from this project and will continue to invest in co-innovation projects with airlines, where we see strategic areas of opportunity and a joint return on investment,” Datalex said.
The activation of a key project with EasyJet “continues to progress well”, hitting a big milestone in December.
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