Gama Aviation (LON: GMAA) shares are up 55% today. Gama has announced that it’s sold of the US subsidiary, JetEast, and will be returning some of that capital received to shareholders. Sure, it’s possible to think that perhaps management should keep it and use it to grow the business. But it’s also possible to think that if it is to be redeployed into a different business line then shareholders should be the ones doing that.
The announcement itself: “Gama Aviation Plc (the "Company") today announces that it has conditionally agreed to sell the Group's US MRO Business, Gama Aviation (Eng) Inc. ("GAEI"), trading as Jet East ("Jet East"), to West Star Aviation Enterprises, LLC ("West Star Aviation") for a value of approximately US$131 million on a cash free/debt free basis with normalised working capital ("Disposal"). Net proceeds from the sale of Jet East are approximately US$100 million. Directors of the Company will review the capital requirements of the Group, and such constraints on returning funds to Shareholders as may apply, and expect to return net proceeds to Shareholders envisaged to be not less than 55 pence per share on a fully diluted basis including options.”
Enough unconditional acceptances have already been received that this will definitely pass at the upcoming General Meeting to discuss. So, barring remarkable events, it’s going ahead.
Gama Aviation share price from Google Finance
And there we can see the reason for the Gama share price jump of course. The payback of capital is going to be a minimum of 55 pence per share. Which were trading at a little under 55 p at announcement. So, therefore, anyone who owned yesterday is going to get all their money back plus also still own the same percentage of the rump business. That’s a pretty good deal. Wish more companies did this in fact.
