Flybe rejects alternative rescue plan

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Cash-strapped Flybe has rejected an alternative rescue plan tabled by Bateleur Capital LLC and Mesa Air Group Inc and says its preferred bid from Virgin Atlantic, Stobart Air and a US hedge fund is the “only viable option” and “preserves the interests” of stakeholders, customers, employees, partners and pension members.

Yesterday (19 February) Mesa tabled a £65m rescue deal for UK regional carrier. The terms of the deal would see the group inject £65 million of new equity at roughly 4.5p per share, much higher than the 1p per share offer tabled by the Virgin-led consortium.

On 15 January the consortium of Virgin, Stobart and Cyrus Capital Partners – which is named Connect Airways – made a bid of £2.2 million. The offer valued each share at 1p, compared with a peak valuation of £2.95 shortly after Flybe’s flotation in 2010.

Mesa’s offer would also include new debt facilities, taking the total funding up to £120m, and is subject to Flybe rejecting Virgin’s offer.

Flybe’s board has accepted the offer and the Connect Airways consortium has pumped £10 million into Flybe to keep it in operation and 10 days later, it received a further £5 million.

Yesterday (19 February), Flybe said it received what it called “a preliminary and highly conditional outline contingency proposal from an investor group led by Bateleur Capital LLC and Mesa Air Group Inc, with indicative support from Mr Andrew Tinkler and other un-named institutional shareholders”.

Flybe said of the bid: “The Board does not believe that the Indicative Proposal is executable in the timeframe required to enable Flybe to continue to trade.

Accordingly, the Board emphasises to shareholders that it continues to regard the arrangements entered into with Connect Airways as being the only viable option available to the Company which provides the security that the business needs to continue to trade successfully.

“The arrangements with Connect Airways preserve the interests of Flybe’s stakeholders, customers, employees, partners and pension members.”

The Connect Airways deal for Flybe is due to be finalised on Friday 22 February.