FlyExclusive to Go Public Through $600 Million SPAC Merger
Private-jet company set to merge with EG Acquisition
On-demand private-jet provider flyExclusive has struck a deal to go public through a merger with a special-purpose acquisition company that would value the combined entity at $600 million.
The Kinston, N.C., business is set to merge with EG Acquisition Corp. EGGF 0.10% , a SPAC led by Gregg Hymowitz, chairman and chief executive of investment firm EnTrust Global, executives with the companies said. The SPAC, which is also backed by Gary Fegel’s private-investment platform GMF Capital, raised $225 million through an initial public offering in late May of 2021.
FlyExclusive plans to use the funds to bolster its fleet of more than 90 jets, according to the company’s CEO Jim Segrave. Every airplane the company has purchased has increased in value, as demand for aircraft has skyrocketed and parts to construct new planes have been harder to come by in the U.S., he said.
FlyExclusive‘s Jet Club is a multitiered membership program that allows customers to access its fleet for a monthly fee—for short trips or cross-country excursions. Mr. Segrave said the company, started in 2015, has been profitable since its second year of operations.
Upon completion of the deal, expected in the first quarter of 2023, flyExclusive and EG Acquisition will combine under a new holding company that will be listed on the New York Stock Exchange. Mr. Segrave is set to lead the merged entity, with Messrs. Hymowitz and Fegel holding board positions.
Proceeds from the deal would amount to about $310 million, including $85 million from sovereign-wealth and U.S. institutional investors via convertible notes.
SPACs are empty shells that raise money in a public offering with a plan to combine with a business later on that gets a listing through the deal. There has been a falloff in such deal making as markets swoon, after it allowed several money-losing businesses to flood the public market in 2020 and 2021.
Chamath Palihapitiya, one of the biggest promoters of SPACs, said last month that he would wind down and return cash from two of his SPACs after the market collapsed. Hedge-fund manager Bill Ackman and baseball executive Billy Beane have also shut down their respective blank-check companies.
“The SPAC world in general has been somewhat unstable in the last year or so, and we were really looking for that unicorn opportunity,” said Mr. Segrave.
Mr. Hymowitz, who has written checks for some of the most prominent activist investors over the years, said his SPAC was on the hunt for “real companies” with a legitimate need for capital.
Two of flyExclusive’s peers, Wheels Up Experience Inc. and Blade Air Mobility Inc., merged with SPACs only to see their share prices tumble. Shares of Wheels Up are down 78% this year, while Blade has dropped 60%.
Subscription-based jet company Flexjet Inc. earlier this month struck a deal to go public through a merger with Horizon Acquisition Corp. II, a SPAC led by billionaire investor Todd Boehly, one of the new owners of soccer club Chelsea FC and a part-owner of the Los Angeles Dodgers.