Shares in Flybe Group soared after it said it had received an alternative financing proposal from a new consortium, challenging a Richard Branson-backed group that agreed to buy out the struggling British regional airliner.
Flybe said the new preliminary financing proposal was from Bateleur Capital, Mesa Air Group Inc with support from Stobart Group former boss Andrew Tinkler.
Flybe said that the proposal was “highly conditional” and it does not believe it could be workable in the timeframe required to enable Flybe to continue to trade.
The optional financing proposal, which includes other undisclosed institutional shareholders, could look to inject cash into Flybe and replace the current funding, according to a statement.
Sky News reported on Tuesday that the new consortium had tabled an offer to inject £65 million (€74 million) of new equity into Flybe at a price of about 4.5 pence per share.
The offer would also include new debt facilities and potential asset sales, bringing the total new funding to Flybe to about £120 million, Sky added.
Flybe had also been approached by Tinkler earlier this month about a possible alternative financing proposal.
Richard Branson's Virgin Atlantic, Stobart Group and Cyrus Capital agreed to buy Flybe, Britain's biggest domestic airline in January, through a joint venture company called Connect Airways for an initial £2.2 million.
Shareholder backing
The deal was later revised to sell the airline’s main trading company Flybe Limited and online operation Flybe.com to the consortium for £2.8 million without needing shareholder backing.
The consortium, which had won the backing of Flybe’s board to buy the airline, had also agreed to pump in as much as £100 million to keep the airline afloat, including a committed credit facility of up to £20 million.
Flybe said on Wednesday it had drawn down the first £15 million of the facility, adding that it continues to regard the arrangements with the consortium as being the only viable option available to the company.
“The arrangements with Connect Airways preserve the interests of Flybe’s stakeholders, customers, employees, partners and pension members.”
Flybe, which operates routes from about 25 British airports, including domestic connections to London's Heathrow, has said its short-term performance had been hit by higher fuel costs, currency fluctuations and uncertainties from Britain's looming exit from the European Union.
Flybe has also agreed to demands from its largest shareholder to call a general meeting to consider replacing chairman Simon Laffin following the cut-price sale. – Reuters