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BermudAir raises capital through fintech deal

Embraer E175s are leased by BermudAir for operations on seven North American routes (Photograph supplied)

BermudAir is diversifying its capital management strategy with a million-dollar tokenised bond issuance.

The transaction was executed via Obligate, the on-chain capital markets platform, in partnership with global digital assets and cryptofinance firm XBTO Group.

BermudAir said: “This innovative tokenised transaction is issued on the public blockchain Polygon, with all payments in the stablecoin USDC, offering a 15-month, 15 per cent per annum return for investors.

“BermudAir is the first airline to leverage cryptofinance capabilities with XBTO and Obligate to raise capital in the new tokenised credit markets, with XBTO acting as lead arranger and bookrunner.

“This debt financing was identified as an opportunity to diversify BermudAir's capital management strategy. It will fund operational and resource enhancements for the airline, particularly related to route expansion, to cater to growing demand, and consolidate its position in new markets.”

Adam Scott, founder and chief executive of BermudAir, said: “Even as a young airline, the funding needs of our business are rapidly evolving.

“Having this kind of innovative financing in the range of available options works for us.

“The efficiencies of using fintech to raise capital in this way are self-evident and we're pleased to be the first airline to do so with another Bermuda-based company that's already so well-established in the market.”

XBTO is a full-service digital asset provider, licensed by the Bermuda Monetary Authority, operating in Bermuda, Miami, New York, London, Paris and Abu Dhabi.

Philippe Bekhazi, the chief executive of XBTO, said: “This milestone represents a significant first step towards enabling democratised access to funding and investment opportunities for both companies and investors alike.

“The tokenised transaction showcases the forward-thinking approach taken by BermudAir and XBTO and sets the stage for similar future issuances. By leveraging the benefits of blockchain technology, this financing method offers increased speed, transparency, security and efficiency.”

Tobias Wohlfarth, head of Origination at Obligate, said: “Our collaboration with BermudAir and XBTO highlights Obligate's strategic focus in enabling blockchain-based debt issuances.

“This issuance demonstrates our platform’s capability to efficiently and securely connect issuers with investors in a regulated environment, reflecting our commitment to innovating the private debt market and expediting investment opportunities.”

The bond is issued in USDC, a stablecoin pegged to the US dollar and backed by US dollar reserves such as cash and US treasuries.

USDC reserves are held in the custody and management of leading US financial institutions, including BlackRock and BNY Mellon.

BermudAir has now grown from servicing three US routes to seven across the US and Canada, including its latest additions Toronto and Halifax.

The Bermuda airline operates more than 50 flights per week on Embraer E175 aircraft featuring a dual-class cabin, with 14 seats in its business cabin and 52 seats in the economy cabin.

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Published May 01, 2024 at 2:06 pm (Updated May 01, 2024 at 9:43 pm)

BermudAir raises capital through fintech deal

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