The struggle over the takeover of UK-based regional carrier Flybe burst into the open after a leading shareholder in the carrier proposed sacking the chairman.
Investment group Hosking Partners, which owns a near 19% stake in Flybe, is angry at the cut-price takeover the airline’s board agreed with a consortium comprising Virgin Atlantic, Southend Airport-owner Stobart Group and investor Cyrus Capital last month.
The consortium, which has established a company called Connect Airways to acquire Flybe, offered just £2.2 million or £0.1 per share for the airline in a deal announced on January 11.
It revised the offer four days later, buying Flybe Group’s trading assets for an additional £2.8 million in a transaction which does not require shareholder approval.
The deal included an immediate bridging loan of £10 million to keep Flybe operating.
However, Hosking has demanded the Flybe board convene an extraordinary general meeting to vote on replacing chairman Simon Laffin with an appointee, Eric Kohn, who heads aviation investment group Barons Financial Services.
Hosking wants Kohn to investigate the sale. The company has previously threatened an injunction to halt the takeover.
The estranged former boss of Stobart Group, Andrew Tinkler, also acquired a 12% stake in Flybe in January making him the group’s second-largest shareholder.
Tinkler has yet to make clear his attitude to the sale, but he has been involved in court action with Stobart and paid four times the offer value for the shares which he bought immediately after the takeover deal was announced.
Flybe confirmed receipt of Hosking’s demands.
In a statement, it said: “The board reaffirms it has acted at all times in the interests of . . . all its shareholders.
“The board continues to have full confidence in its chairman and believes any independent scrutiny of its conduct will support the board’s decision-making.”
The Flybe board has insisted the acquisition will go ahead on February 22. Shareholder approval is now only needed for the sale of the holding group.
Flybe was put up for sale in mid-November. The carrier was valued at £43 million as recently as December and at £36 million early last month.
However, the airline faced a cash crunch in January as card acquirers withheld payments.
Flybe confirmed last week: “Arrangements with the company’s credit acquirers and banks . . . are conditional upon the Share Purchase Agreement [the takeover] completing.”
The acquisition would see all Flybe services rebranded as Virgin Atlantic, with Flybe chief executive Christine Ourmieres-Widener and chief financial officer Ian Milne joining the takeover consortium.
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