Media Release
Webjet Accelerates Expansion
26th February 2003
Webjet is pleased to announce that it has strengthened its strategic relationship with Galileo International that will result in Galileo increasing its current shareholding in Webjet Limited (ASX code WEB) to between 15 to 19% maximum (subject to the share price at the date of issue) and the two companies will work together to develop new software to enhance on-line travel booking.
The Board of Webjet believes that the strengthened alliance with Galileo and its support as a major shareholder will bring the following benefits to Webjet:
- A significant cash injection for software development;
- A powerful and strategic association with a major world distributor of travel services; including access to Cendant Group companies such as Avis, Budget, Ramada Hotels and RCI timeshare;
- The ability to offer travellers a significantly improved booking interface with increased reservation capacity and enhanced functionality; and
- The opportunity for Webjet technical resources to work collaboratively with Microsoft Australia on the development of the aggregation platform, based on Microsoft's .NET architecture;
Galileo is part of the US$14b Cendant group, which includes Avis and Budget car rental companies, Ramada Hotels and U.S based online travel agencies Trip.com and Cheaptickets.com. About 47,000 travel agency locations book one third of all automated travel reservations worldwide through Galileo systems, which distributes products for approximately 500 airlines, 30 car rental companies, 51,000 hotel properties, 400 plus tour operators and all major cruise lines.
According to Phocus Wright, the Asia Pacific travel market is expected to approximately triple over the next three years from US$4.6b in 2002 to US$13.5b in 2004. It is Galileo's objective to accelerate online penetration by leveraging its global footprint in existing and new markets.
Galileo, has executed a subscription agreement with Webjet to participate in a AU$3.6m funding program, managed by Intersuisse Corporate Pty Ltd, that will also be offered to existing Webjet shareholders and institutional investors.
Under the agreement, Galileo will subscribe for up to AU$1.8 million of ordinary shares in Webjet. The shares are to be issued in tranches, with the first tranche of AU$1 million (comprising AU$0.8 million in ordinary shares and AU$0.2 million in a convertible debenture) payable following an approval of the issue of shares by the shareholders of Webjet at a shareholders' meeting currently planned for March 2003. Subsequent tranches (which are all for ordinary shares) will become payable upon completion of certain milestones in the software development agreement entered into by Webjet and Galileo International.
As part of the arrangements with Galileo, Webjet is required to also raise AU$1.8m. Intersuisse Corporate Pty Ltd has been appointed to arrange the balance of funding of the AU$1.8m, by way of an institutional placement and an underwritten share purchase plan. The share purchase plan will give existing shareholders in Webjet the opportunity to participate in a capital raising at the same share price as Galileo, subject to ASIC requirements.
Webjet's Managing Director, David Clarke, said "This development program is enormously significant for our company as it cements our association with Galileo, which we consider to be the most progressive and customer oriented global distribution system in the world and through its ultimate ownership by Cendant Corp. provides extraordinary opportunity for the marketing of products from the Cendant travel brands".
Webjet's Chairman, Allan Nahum, said "We are very pleased that Galileo with its exceptional understanding of the distribution of travel related products, has emphasised its confidence in our business model and our management. Webjet's sustained rate of revenue growth has now been given the best opportunity to accelerate further. Our business model is based on a largely fixed cost structure which will deliver economies of scale as sales increase. These developments will be major factors in the delivery of long term shareholder value."
Sam Galeotos, President & Chief Executive Officer Galileo International & Cendant Travel Distribution Services, said "Galileo is committed to the success of the Australian travel market, and Webjet represents a talented young company with tremendous experience and success in the growing online travel marketplace. Our relationship with Webjet is in line with our goal of building productive customer relationships to increase mutually beneficial business opportunities."
Mark Rizzuto, Galileo's Vice President, South Pacific, said "By further aligning Webjet's marketing and strategic expertise with Galileo's strong customer technology support structure, we see we will accelerate development in a rapidly changing market environment, and build an enhanced local technology platform. This will have the potential to improve business opportunities for all of our customers, not only in this region but globally within the Galileo network".