CHARLOTTE – Kinston-based flyExclusive, a charter flight operator that employs several hundred people in eastern North Carolina, disclosed lots of financial and governance information this week as it prepares for a public offering.
The proxy statement shows that First Citizens BancShares CEO Frank Holding Jr. and Greensboro lawyer Mike Fox will join flyExclusive CEO Jim Segrave as board members of the new company, pending completion of the transaction. Holding leads the Raleigh-based bank that made global news this spring by acquiring the failed Silicon Valley Bancshares from federal regulators. Fox is a Greensboro lawyer who chairs the N.C. Transportation Board.
Last October, flyExclusive said it would go public in a combination with a New York-based special-purpose acquisition company, or SPAC. EG Acquisition is sponsored by New York investment firms EnTrust Global and GMF Capital, which are led by Gregg Hymowitz and Gary Fegel. Both are billionaires by Forbes magazine’s estimates. It will combine with flyExclusive to create a New York Stock Exchange-listed company.
Frank B. Holding Jr., Chairman and CEO, First Citizens Bank (First Citizens photo)
The deal had been expected to be completed by now, but the market for initial public offerings has been depressed amid rising interest rates and fears of a recession.
Still, Segrave is pressing ahead with plans for a combination. The transaction values flyExclusive at $600 million, with the offering expected to provide as much as $310 million in proceeds, including $85 million of convertible notes and $225 million of cash in trust, assuming no share redemptions.
“We are excited to reach this milestone, and to do so with partners who see the value in our business and support our vision for the future,” Segrave said in a press release. Fegel and Hymowitz “have agreed to stay invested for the long-term, with their founder shares locked up for three years, which speaks to their confidence in our long-term business model. They are both extremely successful businessmen who have also agreed to serve on our board of directors.”
The filing shows that parent company LGM Enterprises in October projected that it would have revenue of $360 million in 2022, compared with actual revenue of $211 million in 2021, $135.5 million in 2020 and $108 million in 2019. Net income was expected to total $9.8 million in 2022, compared with actual profit of $8.4 million and $2.5 million in the two previous years.
This year, the company’s revenue is projected to soar 40% to $522 million with profit more than tripling to $38 million.
That financial information is unaudited and “should not be viewed as public guidance,” according to the filing.
In a different section, the filing reported that actual revenue in 2020-21 was similar to the October projections. But net income was $6 million last year, not $9.8 million.
FlyExclusive’s rapid growth stems from increasing demand as corporate executives and wealthy individuals opt for private charters rather than commercial service, Segrave has said. Since its formation eight years ago, flyExclusive has become one of the five largest U.S. private-jet operators.
The company had 723 charter-jet members at the end of 2022, compared with 155 two years earlier. Hours per aircraft during that period increased from 532 to 655.
Other large operators have struggled financially. New York-based Wheels Up Experience reported combined losses of nearly $700 million over the past two years and CEO-founder Kenny Dicker resigned Tuesday amid reports of a possible bankruptcy. Shares trade for about 35 cents; the company went public in late 2020 at $10 per share.
Segrave, who controls about 70% of LGM Enterprise’s equity, has said his operating model is much sounder than rivals. He received compensation of $9.5 million in 2022, while he has an employment agreement to receive an annual base salary of at least $8.5 million for five years, according to the filing. He is eligible for an annual cash bonus of as much as 100% of his base salary.
(C) Business North Carolina
