20th Feb 2019 08:46
LONDON (Alliance News) - Flybe Group PLC shares more than doubled on Wednesday after the struggling airline confirmed receiving a funding proposal to replace its deal with Connect Airways Ltd.
However, the strugging airline reiterated its belief that the Connect Airways deal is the "only viable option".
Flybe shares were trading at 3.0 pence each early Wednesday morning. The stock closed at 1.3p on Tuesday.
Flybe said that on Tuesday it received a "preliminary and highly conditional" outline contingency proposal from an investor group led by Bateleur Capital LLC and Mesa Air Group Inc.
The group is backed by former Stobart Group Ltd chief executive officer Andrew Tinkler and other un-named institutional shareholders, Flybe said.
The proposed cash injection is conditional on Flybe's takeover by Connect Airways, a joint venture between Stobart, Virgin Atlantic Ltd, and DLP Holdings SARL, not proceeding.
Connect Airways agreed to acquire Flybe for 1p per share earlier in January.
"As the investor group is aware, Flybe is bound by the terms of the agreement to complete the sale of its operating subsidiaries to Connect Airways if the conditions to the agreement are satisfied or waived by Connect Airways," Flybe said.
Furthermore, the funding deal is also conditional on agreements being reached with Flybe's credit card acquirers, banks, lessors and pension fund trustees.
The airline reiterated what said at the beginning of February, when it received a tentative proposal from Tinkler, that it believes the takeover by Connect Airways to be the only viable option.
"The board does not believe that the indicative proposal is executable in the timeframe required to enable Flybe to continue to trade," Flybe said.
It added: "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."
Currently, Stobart has been engaged in a courtroom battle against Tinkler, who had his employment with the group terminated in June for "breach of contract and breach of fiduciary duty" after Stobart accused him to have "jeopardised" the future success of the group.
Tinkler also tried to oust Chairman Ian Ferguson, a move that "totally" countered the company's interests and threatened to destabilise it, Stobart claimed.
Last week, the UK High Court ruled the company's removal of Tinkler was lawful and valid.
Tinkler denies wrongdoing, saying he was removed for no good reason.
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