Flybe Group PLC (LON:FLYB) shares flew higher on Monday on the possibility that two separate moves could lead to shareholders getting a better deal than the recommended takeover deal for the struggling airline from a consortium comprising Stobart Group PLC (LON:STOB), Virgin Atlantic and Cyrus Capital.
In a statement regarding recent media speculation, Flybe confirmed that, on 1 February, it “received a very preliminary, short and highly conditional outline contingency proposal” from former Stobart boss Andrew Tinkler “which envisages a capital injection and replacement of the funding provided by the Connect Airways consortium.”
READ: Stobart and Virgin agree to buy Flybe Group's trading assets for £2.8mln
Flybe said its advisers held an initial discussion with Tinkler's advisers in relation to the proposal, which did not include an offer for the whole of the airline or any other acquisition structure, but no formal proposal was made.
The group pointed out that it understood the capital injection under the proposal would only be provided by Tinkler – who bought a 12% stake in Flybe soon after the bid was made by his former company - if the sale of the airline's operating businesses to Connect Airways does not complete.
The firm concluded, however, that its “board does not consider that the Preliminary Proposal offers the certainty required to secure the future of Flybe.”
In a separate statement, Flybe said it has agreed to demands from its largest shareholder, private equity firm Hosking Partners to call a general meeting to consider the removal of its chairman Simon Laffin and the appointment of airline industry veteran Eric Kohn to the board.
Last week, the budget airline rejected as invalid a request by Hosking asking to oust Laffin, appoint Kohn and allow him to conduct an investigation of its cut-price sale to the Connect Airways consortium.
However, today Flybe said it had now received a valid request and would call a shareholders meeting within 21 days from 1 February, as well as interview Kohn before making a recommendation on his candidacy for the board.
The group reiterated though that its articles of association do not confer on board members the necessary powers to investigate the planned sale.
READ: Major Flybe shareholder looking to stop £2.2mln Virgin-Stobart takeover
Hosking, which owns a near 19% stake in Flybe, has said it is concerned with the decline in the company's value in recent months and the board's handling of the sale process.
The Connect Airways offer of just 1p for each Flybe share, made on 15 January, valued the group at £2.2mln, well below the £215mln valuation the airline had when it joined the London Stock Exchange in 2010.
That offer price was a 94% discount to the airline’s closing share price on the day before the bid was made.
The Connect Airways consortium had also agreed to provide a £20mln bridge loan facility to keep the airline flying until the takeover concluded, but four days later it revised the deal to include the sale of the group’s main operating company, Flybe Ltd, and Flybe.com for £2.8mln in return for a revised £20mln bridge loan - £10mln of which was released immediately.
Flybe’s share price, which has oscillated widely with all the twists and turns of the ongoing takeover saga, with up 6.5% at 3.41p in early morning trading on Monday, having spiked up to a 4p high in initial trading.