Struggling airline confirms approach from former Stobart boss
Airline Flybe has confirmed that it has received an offer from former Stobart boss Andrew Tinkler.
The board of the struggling airline has confirmed it has received a “very preliminary, short and highly conditional outline contingency proposal” from Mr Tinkler.
The businessman was at the centre of a row last summer which saw him sacked from the board of the Stobart Group.
Flybe said Mr Tinkler’s offer “envisages a capital injection and replacement of the funding provided by Connect Airways”.
Connect is a Virgin-led group which has offered to provide a £20m liquidity injection to keep the airline afloat.
Flybe said Connect Airways had provided the first £15m of the £20m credit facility it announced in January.
Flybe issued a statement to the Stock Market this morning.
It said: “Flybe received a very preliminary, short and highly conditional outline contingency proposal from Mr Tinkler which envisages a capital injection and replacement of the funding provided by Connect Airways Limited (the “Preliminary Proposal”).
“Flybe confirms that its advisers have held an initial discussion with Mr Tinkler’s advisers in relation to the preliminary proposal and that no formal proposal was made. For the avoidance of doubt, the preliminary proposal does not contemplate an offer for the whole of Flybe or any other acquisition structure.
“The board understands that the capital injection under the preliminary proposal would only be provided by Mr Tinkler if the sale of Flybe’s operating businesses to Connect Airways in accordance with the share purchase agreement dated 15 January 2019 does not complete.
“The board does not consider that the Preliminary Proposal offers the certainty required to secure the future of Flybe.
“Accordingly, the board emphasizes 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.”
Connect Airways is a joint venture company which is owned 40% by DLP Holdings., a company wholly-owned by funds managed by Cyrus Capital Partners, 30% by Stobart Aviation, a wholly-owned subsidiary of Stobart Group Limited, and 30% by Virgin Travel Group Limited, a wholly-owned subsidiary of Virgin Atlantic.
As part of its proposed acquisition of Flybe, Connect Airways committed to make available a £20 million bridge facility to support Flybe’s ongoing working capital and operational requirements.
Following completion it intends to provide up to £80 million of further funding to invest in its business and support its growth.
Mr Tinkler said: “We look to the board to continue engaging positively with regard to our outline proposal, for the benefit of all shareholders.”
Last month Mr Tinkler bought a 10 per cent stake in the British airline, just as it was announced that the consortium, which also includes Stobart, was set to purchase the struggling airline.
Flybe announced it was seeking a sale at the end of last year after profits fell 54 per cent for the six months to the end of September.
The fall in profits was triggered by higher fuel prices, a weaker Pound and falling customer demand.