flyExclusive Announces $25 Million Equity Investment

Rhea-AI Summary

flyExclusive, Inc. (FLYX) secures $25 million in cash proceeds through a securities purchase agreement with EnTrust Global, enabling the company to expand its private jet fleet and enhance customer experience. The agreement includes the purchase of 25,000 shares of Series A Preferred Stock at $1,000 per share, accruing dividends at varying rates over the years. Additionally, flyExclusive issues a warrant to EnTrust Global allowing the purchase of Class A common stock at a set price after two years.

Insights

Financial Analyst

flyExclusive's recent transaction with EnTrust Global, involving the sale of Series A Non-Convertible Redeemable Preferred Stock, represents a strategic capital infusion aimed at bolstering the company's working capital and supporting its aircraft acquisition strategy. The complexity of the financial instrument used here indicates a tailored approach to financing that aligns with the company's growth objectives while offering the investor a structured return profile.

The escalating dividend structure, starting at 10% and potentially reaching 16% per annum, suggests a high cost of capital, which could reflect the risk profile associated with the private aviation industry or flyExclusive's specific business model. The capital raised could enable flyExclusive to expand its fractional ownership program, potentially increasing market share and enhancing customer service reliability. However, it's crucial to monitor the company's ability to meet these dividend obligations, as they represent a significant financial commitment.

Additionally, the issuance of a warrant to the investor provides a potential future equity stake, which could dilute existing shareholders but also aligns investor interests with the long-term performance of the company. The exercise price of $0.01 per share is nominal, indicating a strong incentive for the investor to capitalize on the warrant if the company's stock performs well.

Market Research Analyst

The private jet charter industry is marked by high capital expenditure and sensitivity to economic cycles. flyExclusive's move to expand its fleet through this capital raise is indicative of an aggressive growth strategy in a competitive market. The decision to issue preferred stock rather than common equity or debt could be a strategic one, aimed at preserving shareholder value and avoiding the dilution of control.

From a market perspective, the success of flyExclusive's expansion plans will depend on the demand for private aviation services, which is influenced by factors such as corporate travel budgets, economic conditions and consumer preferences. The fractional ownership model they aim to enhance is becoming increasingly popular as it provides access to private aviation without the full cost of ownership, which could be a significant growth driver for flyExclusive.

The investor's consent rights and the structured redemption options provide a layer of protection and exit strategy, which is a prudent move in a market where liquidity can be a concern. These terms suggest a careful balance between investor security and company flexibility.

Aviation Industry Expert

The aviation sector requires substantial investment for fleet expansion and operational scalability. flyExclusive's strategy to become a vertically integrated private aviation company is ambitious, as it involves controlling all aspects of the service from aircraft acquisition to customer experience. This integration could lead to cost efficiencies and provide a competitive edge in the luxury travel market.

However, the industry is also subject to stringent regulatory requirements and the impact of such a capital raise must be evaluated in the context of regulatory compliance and safety standards. The company's ability to deploy the capital effectively to meet these standards while expanding its fleet will be critical to its success.

The high dividend rates on the preferred stock issued may also reflect the inherent risks of the aviation industry, such as fuel price volatility, maintenance costs and the impact of economic downturns on luxury travel demand. Investors and stakeholders should closely monitor how these funds are allocated to ensure that they contribute to sustainable growth rather than just short-term expansion.

Capital to fund flyExclusive’s working capital, including aircraft acquisition plans

KINSTON, N.C.--(BUSINESS WIRE)-- flyExclusive, Inc. (NYSEAMERICAN: FLYX) (“flyExclusive” or the “Company”) a provider of premium private jet charter experiences, today announced that it has entered into a securities purchase agreement with an investment vehicle managed by EnTrust Global (“the Investor”) pursuant to which the Investor purchased 25,000 shares of Series A Non-Convertible Redeemable Preferred Stock, par value of $0.0001 per share (the “Series A Preferred Stock”), at a purchase price of $1,000 per share. The Company received approximately $25 million in cash proceeds in connection with the transaction, which closed on March 4, 2024 (the “Issue Date” or “Effective Date”).

“We’re thrilled to expand our relationship with EnTrust Global, a partner that recognizes the significant opportunity flyExclusive has to become the nation’s first vertically integrated private aviation company,” said Jim Segrave, Founder and CEO of flyExclusive. “Expanding our fleet will allow us to further build out our fractional program and bring greater reliability and convenience to our customers.”

The Series A Preferred Stock accrues dividends beginning on the Issue Date and ending on the first-year anniversary of the Issue Date at 10.00% per annum, at 12.00% per annum for the second year, at 14.00% per annum for the third year and at 16.00% per annum for the fourth year and thereafter. The dividends will compound annually for the first two years. On the third annual dividend payment date, the Company must pay at least 43% of the dividends in cash, and on each subsequent annual dividend payment date the Company must pay 100% of the dividends in cash. After the first-year anniversary of the Issue Date, flyExclusive may elect to redeem all or a portion of the outstanding shares of Series A Preferred Stock, or any portion thereof, for cash at a redemption price per share as detailed in the Series A Certificate of Designation. After the fifth-year anniversary of the Issue Date, each holder of the Series A Preferred Stock may elect to require the Company to redeem all or a portion of its outstanding shares of Series A Preferred Stock for cash at a redemption price per share as detailed in the Series A Certificate of Designation. The Series A Preferred Stock is generally not entitled to any vote but holds certain consent rights as described in the Series A Certificate of Designation. If voting is required by applicable law or otherwise, each holder of Series A Preferred Stock will be entitled to one vote per share.

On the Effective Date, flyExclusive also issued the Investor a warrant, granting the Investor the right to purchase shares of the Company’s Class A common stock (“Common Stock”) in an aggregate amount equal to 1.5% of the Company’s outstanding Common Stock on a fully diluted basis (the “Share Count Cap”), calculated in accordance with the terms of the Warrant, at an exercise price of $0.01 per share (the “Warrant”). The Warrant is not exercisable until the second anniversary of its issuance, at which time only one half of the Share Count Cap may be purchased. Beginning on the third anniversary of the issuance, 100% of the Share Count Cap may be purchased. The Warrant expires on the fifth anniversary of the Effective Date and may not be exercised for a number of shares of Common Stock having an aggregate value in excess of $11,250,000, calculated in accordance with the terms of the Warrant.

About flyExclusive

flyExclusive is a vertically integrated, FAA-regulated operator of private jet experiences offering customers on-demand charter, Jet Club, and fractional ownership services to destinations across the globe. flyExclusive has one of the world’s largest fleets of Cessna Citation aircraft, and it operates a combined total of approximately 100 jets, ranging from light to large cabin sizes. The company manages all aspects of the customer experience, ensuring that every flight is on a modern, comfortable, and safe aircraft. flyExclusive’s in-house repair station, including paint, interiors, and avionics capabilities, are provided from its campus headquarters in Kinston, North Carolina. To learn more, visit www.flyexclusive.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this document, including but not limited to: the potential dilution of stock ownership by our capital raising efforts; the ability of the Company to repay its debt; management of growth; the outcome of any legal proceedings; the ability to maintain the listing of the Company’s securities on a national securities exchange; volatility of the price of the Company’s securities due to a variety of factors, including changes in the competitive and highly regulated industries in which flyExclusive operates, variations in operating performance across competitors, changes in laws and regulations affecting flyExclusive’s business; the ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities; and the risk of downturns and a changing regulatory landscape in the highly competitive aviation industry. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of flyExclusive’s registration statement on Form S-1 and other documents filed by the Company from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. The Company does not give any assurance that it will achieve its expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240305412054/en/

Media: Jillian Wilson, Marketing Specialist

media@flyexclusive.com

Investor Relations: Sloan Bohlen, Solebury Strategic Communications

investors@flyexclusive.com

Source: flyExclusive, Inc.

FAQ

What is the ticker symbol for flyExclusive, Inc.?

The ticker symbol for flyExclusive, Inc. is FLYX.

How much cash proceeds did flyExclusive receive through the securities purchase agreement?

flyExclusive received approximately $25 million in cash proceeds through the securities purchase agreement.

Who did flyExclusive enter into a securities purchase agreement with?

flyExclusive entered into a securities purchase agreement with an investment vehicle managed by EnTrust Global.

What is the purchase price per share of the Series A Preferred Stock?

The purchase price per share of the Series A Preferred Stock is $1,000.

What are the dividend rates for the Series A Preferred Stock over the years?

The Series A Preferred Stock accrues dividends at 10.00% per annum for the first year, 12.00% for the second year, 14.00% for the third year, and 16.00% for the fourth year and thereafter.

When can the warrant issued by flyExclusive to EnTrust Global be exercised?

The warrant issued by flyExclusive to EnTrust Global can be exercised starting from the second anniversary of its issuance.