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Flybe shares reverse gains as troubled airline reiterates its takeover position

Published: 08:52 24 Jan 2019 GMT

Flybe plane
The company reiterated that if the sale of its operating businesses is completed, Flybe Group PLC will then be a non-trading entity

Flybe PLC (LON:FLYB) shares reversed a recent speculative rally as the troubled airline poured cold water on any investor hope for a better offer than the rescue deal agreed with Connect Airways, a consortium backed by Virgin Atlantic and Stobart Group PLC (LON:STOB) earlier this month.

In early morning trading, Flybe shares were down 38% at 3.99p having soared almost 60% higher on Wednesday.

READ: Major Flybe shareholder looking to stop £2.2mln Virgin-Stobart takeover

In a note giving shareholders an overview of the situation, Flybe said the £2.8mln sale to Connect Airways of its trading subsidiaries, announced last week, is expected to complete by the longstop date of 22 February 2019 and stressed that this will not require shareholder approval.

The group added that Connect Airways has now provided the first £10mln of the £20mln secured committed credit facility it agreed to provide conditional on the sale, and Flybe continues to receive payments from its credit card acquirers.

It stressed that the agreements with its credit card acquirers and banks are important to enable Flybe to continue to trade and are conditional themselves upon the trading subsidiary disposal completing.

The company reiterated that if the sale of its operating businesses is completed, Flybe Group PLC will then be a non-trading entity with neither subsidiaries nor other material assets

It added that, once that sale completes, the shareholder vote will relate purely as to whether to approve an offer of 1p per PLC share, payable direct to shareholders by Connect Airways.

On Monday, Flybe shares rose amid reports that one of the airline’s biggest shareholders was looking to block the proposed cut-price takeover.

Sky News said London-based asset manager Hosking Partners, which holds almost 19% of Flybe shares, had reportedly instructed lawyers to explore its options in relation to the firm’s proposed £2.2mln offer to shareholders by Connect.

The previous Monday, former Stobart boss Andrew Tinkler also muddied the waters by confirming he had taken a 12.2% stake in Flybe.

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