Regional carrier Flybe has told its shareholders that it will have to close down operations if they vote against the proposed sale to Virgin Atlantic and Stobart Group.
In a statement yesterday, the airline warned that losing the sale would mean investors risk walking away with nothing for their shares.
Flybe’s board approved the £2.2 million sale to Connect Airways, a consortium made up of Virgin Atlantic, Stobart Group and Cyrus Capital in January, but shareholders in the airline have yet to vote on the issue.
On 15 January, Connect Airways revised its offer after Flybe failed to meet a set of conditions to secure a £20 million loan, so to avoid the airline going into administration the consortium agreed to buy the operating facilities (the airline and the website) for £2.8 million.
That sale is due to be completed on 22 February and does not need shareholder approval, but once it is finished the Flybe parent company will not have any remaining assets other than the cash from the sale. The airline says this means there will be no “remaining funds available for distribution to Flybe shareholders”.
Major shareholder Hosking Partners questioned the low price tag put on the sale and threatened a legal challenge. The firm accused Flybe’s directors of ‘breaching’ their duties to investors by not informing them of its financial situation soon enough, creating a ‘false market’ in the company’s shares.
Now Flybe has admitted the 1p-per-share offer was “disappointingly low” but maintained its position that it’s the only deal on the table to save the airline.
Flybe’s statement said it had “received a number of expressions of interest both before and after the announcement of the formal sale process” and that it had chosen Connect Airways from a shortlist of potential offers because it would enable the airline to continue operating.
Shareholders will vote on the deal at a court meeting in London on 4 March.
It also warned that “if the scheme is not approved, the Flybe directors intend to take steps to wind up the company and shareholders are likely to receive now value for their shares in Flybe. Accordingly, the Flybe directors believe that the terms of the acquisition remain in the best interests of Flybe shareholders as a whole and unanimously recommend that Flybe shareholders vote in favour of the resolutions to be proposed at the court meeting and the general meeting”.