There was a major development in the Flybe takeover saga this morning.
It appears that the subsidiary of the quoted company, Flybe Group plc, which runs the airline has been sold to the Virgin Atlantic / Stobart Group consortium subject to a limited number of conditions. Final completion is expected by 22nd February.
The price was £2.8m. This compares to the original £2.2m offer for the quoted company.
This means that, whilst Flybe Group plc will remain a quoted company, it seems it will be a shell with no trading assets of note. The sale to the Virgin-led consortium appears to be a done deal and Flybe shareholders will not have an opportunity to vote on the transaction. The remaining shell of the PLC will still be acquired by the consortium at a future date so shareholders should still receive a payment.
The reason behind this appears to be that Flybe Group failed to meet the conditions attached by the banks to the £20m bridge loan that the consortium had offered. This new structure allows half of the bridging loan to be released immediately.
Here is the announcement:
Flybe Group plc (“Flybe” or the “Company”)
On 11 January 2019, Connect Airways Limited (“Connect Airways”) announced a recommended cash offer (the “Recommended Offer”) for all of the issued and to be issued share capital of Flybe Group plc (“Flybe”).
Together with the announcement of the Recommended Offer, Flybe entered into a secured bridge loan facility (the “Bridge Facility Agreement”) with the shareholders of Connect Airways (the “Consortium”) pursuant to which the Consortium agreed to make available to Flybe a committed credit facility of up to £20 million, subject to a number of conditions. Despite significant efforts it has not been possible to satisfy these conditions and so Flybe has been unable to draw any funds under the Bridge Facility Agreement.
Divestment of Flybe Limited (including Flybe Aviation Services Limited) and Flybe.com Limited and agreement on a Revised Bridge Facility
In light of the above, the Board of Flybe and Connect Airways are pleased to announce that they have reached agreement on:
· the purchase by Connect Airways of the Group’s main trading company, Flybe Limited (including Flybe Aviation Services Limited) and the digital company Flybe.com Limited for £2.8 million (the “Divestment”), subject only to a limited number of conditions; and
· a revised Bridge Facility of up to £20 million to provide funding to Flybe Limited, of which £10 million will be released today to support the business. In addition, a number of improved agreements with banks have also been reached today to improve liquidity.
Furthermore, the Consortium has confirmed to Flybe that its plans for the future of the Flybe business including the combination with Stobart Air remain as set out in the Recommended Offer including its commitment to provide £80 million of further funding.
Flybe confirms that following its transfer to a Standard Listing which becomes effective on 17 January 2019, the Divestment will not require shareholder approval. The long stop date for the Divestment is 22 February 2019.
The Board of Flybe believes that obtaining this revised facility from the Consortium provides the security that the business needs to continue to trade successfully. This preserves the interests of its stakeholders, customers, employees, partners and pension members.
Status of recommended offer by the Consortium for Flybe
Shareholders should note that the Recommended Offer announced on 11 January 2019 will proceed irrespective of the Divestment. Further communications will be made as appropriate.
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