THE Ryanair roadshow, aimed at encouraging investors to buy shares in the airline, moves to the US this week. Some 10 days of presentations to prospective investors are planned, starting today in Baltimore, Maryland. The latest round of roadshows follows a series of presentations in Europe over the last 10 days.
Chief executive, Mr Michael O'Leary, and chief financial officer, Mr Michael Cawley, with advisers from Morgan Stanley, Investment Bank of Ireland and Davy Stockbrokers will meet potential investors in New York, Boston, Chicago, Atlanta Milwaulkee and Wisconsin before finishing up on the West coast in San Francisco.
The response in the US is important because Ryanair aims to sell 50 per cent of the 54 million shares on offer to US investors. It hopes to sell 25 per cent of the shares to Irish investors and 25 per cent to European.
The flotation through which 35 per cent of Ryanair will be sold to investors is aimed at raising £90-£106 million. A target share price of 165p-195p has been set out in the initial flotation document - the Pathfinder Prospectus.
The presentations to potential investors which began in Dublin 10 days ago are part of the process of setting the share price at which Ryanair will come to the market. Investors who attend the presentations are invited to submit orders for shares. Ryanair advisers will then do a "bookbuilding exercise" aimed at assessing the exact level of demand for the shares. This bookbuilding, taken with market conditions at the end of the month, will be used to set the share price for flotation. The shares are due to come to the Dublin and NASDAQ (New York) markets on May 28th.
Last week, Ryanair made presentations in Dublin, Frankfurt, Paris, Edinburgh and London. Mr O'Leary described the response as "good". It had breakfast and lunch meetings with smaller investors and made one on one presentations to bigger investment houses. Among the investors Ryanair met in Edinburgh and London were Standard Life, Morgan Grenfell, HongKong Shanghai Bank, Sun Life of Canada Asset Management, Fidelity Investments, Electra Flemming, JP Morgan, Canada Life, Janus Capital and Mercury Asset Management.
In mainland Europe investors receiving presentations included Dresdner Bank, Deutsche Bank, IndoSuez and Paribas.
According to Mr O'Leary, questions from investors centred on the potential for the new European routes - will the formula that has generated profits on the Dublin/UK routes transfer into the European market - and fleet replacement issues.
There were no questions about the changes in accounting policies for maintenance and depreciation which allowed an upward revision of 1995 profits, he said. Investors "are familiar with airline accounting and are comfortable that our policies are cautious," he said.
Bonuses of £17 million paid to Mr O'Leary between 1995 and 1997 were not raised, he said. "They are over. It was a historic deal. Management remuneration is seen as in line with the industry". Responding to whether staff costs could he forced up following the revelation about the bonus payments, he said the company had a five year pay agreement in place and staff would benefit from a successful flotation.
On the danger that duty free sales - which account for 10 per cent of pre tax profits - may disappear in mid 1999, Mr O'Leary said the company was looking at alternatives which included food, drink and gift sales, credit card handling fees and car hire. Ryanair "will ensure that any loss to staff will be reflected in other productivity schemes," he added.
The outcome of the Ryanair roadshows will only become clear at the end of the month when the final book building is completed.
