The Virgin Atlantic-backed consortium bidding for Flybe Group PLC (LON:FLYB) has agreed to buy the struggling airline’s main trading assets for £2.8mln, effectively increasing its takeover valuation.
Last week, Connect Airways, which also consists of Stobart Group Ltd (LON:STOB) and US hedge fund Cyrus Capital, agreed to pay £2.2mln for the whole group.
READ: Stobart teams up with Virgin to take out Flybe
Despite the higher price tag, Flybe shareholders still only stand to receive that initial 1p a share offer which Flybe's board has recommended.
In a statement on Tuesday, Flybe said that because it will transfer to a standard listing on Thursday (17 January), the divestment of the trading assets – comprising Flybe Limited and Flybe.com Limited – does not require shareholder approval.
Under the terms of the original deal, Connect had agreed to provide a £20mln bridge loan facility to help keep Flybe ticking over while the sale completed.
But the airline said on Tuesday it had failed to meet an unspecified condition of that loan and so had been unable to withdraw any of the funds.
Flybe needs the money
As part of the restructured deal, Connect has agreed to provide Flybe with a revised £20mln bridge loan - £10mln of which will be released immediately.
“The board of Flybe believes that obtaining this revised facility from the consortium provides the security that the business needs to continue to trade successfully,” read a statement on Tuesday.
Connect’s intentions for Flybe remain the same: it will combine it with Stobart Air and use the Virgin Atlantic brand to operate a network of regional flights.
To help get things off the ground, the consortium is also sticking to its promise to provide £80mln of further funding to their new venture.
Shareholders bypassed
As investors will only get a say on the proposed sale of the whole business, it could prove costly for ex-Stobart boss Andrew Tinkler, who yesterday bought 12.2% of Flybe shares for just shy of £1mln.
Tinkler paid almost 4p for each of his shares, and he has already seen a considerable amount wiped from his investment: Flybe shares were down 48% to 2.15p in mid-morning trading on Tuesday.
-- Updates to clarify disposal --