Datalex, a retail software provider to airlines, said on Thursday it plans to raise €25 million in the “early autumn” as it seeks to repay high-cost loans from its main investor Dermot Desmond and secure working capital to invest in growing the business.
Mr Desmond’s Tireragh Limited vehicle had €13 million loans outstanding at Datalex at the end of last year. The debt carries an 18 per cent interest rate, and some €1.9 million of interest was owed at that stage.
Datalex’s chairman David Hargaden told investors at the group’s annual general meeting in Dublin on Thursday that it is the board’s intention to launch a €25 million equity fundraising in the early autumn.
“The potential fundraising, if completed, is expected to enable the group to repay in entirety its existing loan facility with Tireragh Limited and provide sufficient working capital to invest further in the group’s product roadmap and activation projects, while continuing to compete for new revenue opportunities,” he said.
“There is no certainty at this stage that the potential fundraising will complete, nor the timing or terms of the potential fundraising. Further announcements will be made in due course as appropriate.”
Datalex confirmed in its annual report last month that its revenues grew by 23 per cent last year to $29.8 million (€27.8m), while its losses before interest, tax, depreciation and amortisation narrowed to $2.9 million from a $5.3 million shortfall for 2022.
Mr Desmond also gave the company breathing room to raise equity later this year by offering to extend the term of his loans by six months to July 1st, 2025. He also agreed to provide a new €10 million facility if needed should the equity raise not be completed.
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.
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.
The market value of Datalex has fallen by 26 per cent to €59.2 million so far this year as investors have been anticipating a share sale.
Mr Hargaden highlighted to shareholders at the agm that according to now-decade-old EU rules they would need to hold their shares in electronic rather than certificate form in order to participate in the potential fundraising. “Therefore, the board would encourage any shareholder, who holds their shares in certificated form and would like to be eligible to participate in the potential fundraising, to dematerialise their shareholding at their earliest convenience,” he said.
Dematerialisation is jargon for a process where share ownership recorded under certificates are replaced and recorded electronically by book entry.
Meanwhile at the agm Datalex shareholders ignored a call from a leading advisory firm, Institutional Shareholder Services (ISS), for investors to vote against the travel retail software company’s remuneration report after its new chief executive received a $238,928 sign-on bonus and 3.7 million stock options that activate sooner than normal. Over 99.8 per cent of shareholders that took part in the vote backed the remuneration report.
The company hired Jonathan Rockett, a former managing director and chief financial officer of mobile top-up firm Ding, as chief executive last November, succeeding tech industry veteran Sean Corkery.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
