Flybe is continuing to back a Virgin Atlantic-led consortium hoping to land the troubled UK regional carrier in the face of a last-minute alternative financing proposal.
US commuter carrier Mesa Air Group is supporting a counter proposal believed to involve injecting £65 million of new equity into loss-making Flybe, according to Sky News.
But the offer, which would reportedly provide a total of £120 million in fresh funding to Exeter-based Flybe, is conditional on the agreed deal with Virgin Atlantic, Stobart Group and a hedge fund Cyrus Capital being jettisoned.
The refinancing proposal from an investor group led by Bateleur Capital and Arizona-based Mesa Air Group was received by Flybe yesterday, the carrier confirmed in a statement to the London Stock Exchange this morning.
The alternative offer – described by Flybe as being “a highly conditional outline contigency proposal” – is being supported businessman Andrew Tinkler and other un-named institutional shareholders.
The emergence of the rival bid comes just three days before the sale of Flybe’s operating assets to the Virgin Atlantic-backed Connect Airways consortium.
Hosking Partners, which owns 19% of Flybe, has criticised the decision to recommend Connect Airways’ 1p-a-share offer for the holding company while selling its main assets in a separate deal worth just £2.8 million.
The asset sale, which does not require shareholder approval, is due to take place on Friday.
Flybe has drawn down the first £15 million of £20 million in loans from Connect Airways.
“The sums utilised under the credit facility from the Connect Airways shareholders are repayable not later than 22 February 2019,” the carrier said. “The arrangements with the company’s credit card acquirers and banks are vital to enable Flybe to continue to trade and are conditional themselves upon the SPA [share purchase agreement] completing.
“Therefore, 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.
“Flybe continues to work with Connect Airways on the sale of Flybe’s operating businesses. The SPA is subject to only a limited number of conditions and progress is being made to meet those conditions on time in anticipation of completion on or before 22 February 2019.”
Hosking has nominated aviation finance expert Eric Kohn to join the Flybe board as a new independent chairman.
The rival US offer to save the carrier came just days after Flybmi collapsed into administration.
Under the preferred plan, Stobart Air will be folded into Connect, with all of Flybe’s services rebranded under the Virgin Atlantic name.
But Tinkler attacked the deal this week in comments to the Financial Times in which he described it as “an insult to the aviation industry”.
Flybe put itself up for sale in November following a profit warning.
