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Internet travel business specialist Webjet today announced that it has completed negotiations and agreements with Harvey World Travel which subject to shareholder approval will result in an extremely the most significant strategic development in the company’s history.

Highlights of the proposed agreement include:

• HWT will take an initial 11% equity holding in Webjet for $840,000 with options to take a further 26% equity over a prescribed time

• Webjet will licence to HWT its travel service aggregation technology (TSA)( and develop it further

• Webjet will be able to benefit from the total strength of the HWT group buying power creating further economies in its operations

The benefits of the TSA technology will enable Webjet and HWT to take an Australian travel market technology leadership as TSA delivers a next generation internet based booking platform which aggregates multi-sourced travel data. The TSA advantage is that it can access and process data held, for instance, in diverse technology systems with different airline and hotel networks, and integrate it into a single display of total information. This generates enormous efficiencies of operation and clarity of travel information and avoids consultants and customers having to access different internet sites to obtain the same information.

Detailing the Agreement Webjet’s Managing Director David Clarke said the arrangements would produce a strategic alliance of very significant strength in the Australian market and would provide Webjet with a strategic development partner which would materially enhance Webjet’s ability to capitalise on opportunities in a rapidly changing travel market in the Australian region and potentially in other parts of the world where its expertise in online travel retailing could be further developed.

“Webjet’s travel service aggregation platform developed in association with Galileo and Microsoft during 2003 and successfully launched at the beginning of 2004 represents world leading internet distribution technology and has never been more relevant in an environment where new low cost carrier models continue to bypass traditional distribution channels and as a result open up enormous opportunities,” Mr Clarke said.

“The result of the transaction will be to materially strengthen Webjet’s balance sheet and position the company in a powerful and unique strategic sense. 

“We are delighted to form such a significant commercial and equity relationship with Harvey World Travel which we consider to be one of the leading retail travel groups in the world. and in our view the only travel group inAustralia that has successfully developed a travel franchising model which is soundly based strategically and economically.

“The Harvey World Travel brand name in Australia according to a number of research surveys has one of the highest, if not the highest, awareness levels and from that platform the group has recently embarked on a number of strategic initiatives involving corporate account selling in Australia which along with its overseas operations will produce impressive annual turnover.”

HWT Managing Director Barry Mayo said: “The acquisition of the stake in the Webjet Internet travel business, together with the right to sub-licence the software across the HWT Total Network, will generate additional revenues for HWT, while at the same time, giving HWT substantial competitive advantage for a period of time creating a point of difference to leisure travel consumers, corporate accounts, franchisees, prospective franchisees, and potential members of CT Partners.

“This point of difference is expected to see greater market share and significant improvements in consultant productivity.”

“In the corporate travel market this new HWT Operating Platform will assist CT Partners' corporate travel managers to deliver the best airline fare solution to their corporate accounts improving accuracy and thereby reducing corporate accounts' possible lost savings.”

The various agreements comprising the arrangement are subject to Webjet shareholder approval which is to be sought at an extraordinary general meeting of the Company to be held on a date to be advised.

Under the proposed arrangements:

• Webjet will issue up to 21 million ordinary shares to Harvey World Travel at 4 cents per share to be subscribed for in three tranches of 7 million shares each with each tranche dependant on the achievement of certain milestones to occur during the 90 day period following Webjet obtaining shareholder approval.

• Webjet will grant Harvey World Travel options to subscribe for an additional 23 million ordinary shares at 4 cents per share exercisable at any time within 180 days from the date of issue of the last tranche of 7 million shares (Initial Options)

• In addition and in consideration for the payment by HWT of $56,000, Webjet will issue further options to Harvey World Travel to subscribe for 56 million ordinary shares at any time within 54 months following shareholder approval at a price to be determined relative to the volume weighted average price of Webjet’s stock at the time (Further Options) . The exercise price will vary depending on the date of exercise.

• Webjet will sub-licence to Harvey World Travel its travel service aggregation platform technology developed with Microsoft and Galileo. It will also assist Harvey World Travel in developing a consumer internet travel booking site and will enter into a development association to provide for a franchise internet operating platform utilising the travel service aggregator. This will result in the full technological empowerment of the HWT Group on the internet and as a result will create a set of market circumstances where the travel service aggregator becomes one of the leading internet distribution platforms in the Australian market.

• Webjet will continue to operate its current business model under its existing brand name but will become a member of the Harvey World Travel Total Network buying group and will fully participate in the HWT Group buying arrangements which Webjet considers will materially add to its ongoing business development both at a direct margin level and critically at a strategic supply level.

• Concurrent with the completion of these arrangements existing Webjet shareholders will be invited to participate in a limited equity issue under a shareholder purchase plan capped at an aggregate amount of $200,000.

Following the initial subscription of the 21 million shares Harvey World Travel will assume a shareholding in Webjet of approximately 11%. If Harvey World Travel exercises all of the Initial Options their shareholding in Webjet will increase to approximately 21% and if they exercise all of the Further Options their shareholding position would increase to approximately 37%.

Webjet’s board has invited Harvey World Travel Limited to join its existing board of five making a total complement of seven.

Full details of the transaction will be set out in an explanatory memorandum (including an independent expert’s report) which will be despatched to shareholders with a notice of meeting.

David Clarke
Managing Director
Webjet Limited

For further information contact David Clarke on (03) 9828 9723 or mobile 0438 352 351

Webjet is a pure and focussed internet seller of travel under the URL Webjet.com.au and its associated corporate site Webjet.biz and does not operate in the traditional travel shop arena and has a total gross transaction turnover for the year June 2003 of approximately $20 million (an increase of approximately 60% over the previous year). Webjet developed the TSA in a unique association with Microsoft Solution Development Centre in Australia and one of its key shareholders, Galileo, in 2003. The TSA was successfully launched in January 2004 and forms the foundation for the strategic development of the company’s business in an environment where travel suppliers are seeking low cost distribution channels.

Harvey World Travel is the largest single brand travel franchise group in the Southern Hemisphere and isAustralia’s leading full-service travel franchise providing international and domestic retail travel services from more than 500 franchised agencies throughout Australia, New Zealand and Southern Africa. There are 350 shops Australia-wide. Harvey World Travel established in 1951, listed on the ASX in December 1999 and has an annual network turnover exceeding $1.4 billion (AUD).