Budget airline Fastjet Plc said South African carrier Solenta would become a 28 percent shareholder in the company and that it would also raise at least $28.8 million through a share placement.

Africa-focused Fastjet said on Thursday it would buy a special purpose vehicle (SPV) held within the Solenta group by issuing nearly 95.6 million shares.

The SPV has three wet-leased aircraft and the supply of other services over the next five years.

The share issue is priced at 16.3 pence each, representing a nearly 2 percent discount to Fastjet’s Wednesday close of 16.625 pence, the company said.

Fastjet said it would use the proceeds for working capital purposes, allowing it to implement new revenue generating measures and reach cash flow break-even by the fourth quarter of 2017.

The company said Solenta would have the right to nominate two members to its board.

Fastjet is looking to cut costs amid tough conditions in its home market, Tanzania. In March, it warned that it would no longer be cash flow-positive this year.

In November, Fastjet’s chairman resigned bowing to the pressure from its second largest investor to sack him for failing to relocate the airline’s head office quickly and criticised him for a high cost base.

Source: Reuters