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Flybe warns shareholders it would be wound up if they do not support recommended takeover offer

In a statement released after the market close on Thursday, the budget airline said that unless the Connect Airways deal goes through investors "are likely to receive no value for their shares"
Flybe plane
Last month, Flybe accepted a 1p-a-share offer valuing it at £2.2m from the Virgin-led consortium

Flybe PLC (LON:FLYB) has warned its shareholders that if they do not support the sale of its business to a Virgin Atlantic-led consortium the troubled carrier would be wound up.

In a statement released after the market close on Thursday, the budget airline said that unless the deal goes through investors "are likely to receive no value for their shares".

READ: Flybe flies higher after two separate moves that could lead to shareholders getting a better takeover deal

Last month, the struggling company accepted a 1p-a-share offer valuing it at £2.2m from the Connect Airways consortium, which also includes Southend airport owner Stobart Group PLC (LON:STOB) and private equity firm Cyrus Capital.

It later also reached an agreement to sell its main trading company, Flybe Limited and the digital company Flybe.com, for £2.8mln to Connect, a deal which does not require the approval of shareholders.

Flybe urged shareholders to approve the recommended takeover deal at a meeting on March 4.

The airline said: "Although the price per share offered by Connect Airways was disappointingly low, its proposal was ultimately the only proposal capable of immediate execution to enable Flybe and the Flybe Subsidiaries to continue to trade as going concerns."

It added: "Accordingly, the Flybe Directors believe that the terms of the acquisition remain in the best interests of Flybe Shareholders as a whole and unanimously recommend that Flybe shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the general meeting."

READ: Stobart and Virgin agree to buy Flybe Group's trading assets for £2.8mln

Flybe shares closed trade on Thursday at 3.16p each.

The group’s shares flew higher on Monday fuelled by the possibility that two separate moves could lead to shareholders getting a better deal than the currently recommended takeover.

In a statement confirming weekend 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.”

Tinkler and Hosking moves

Flybe said its advisers had 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 also 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.

The group reiterated, however, that its articles of association do not confer on board members the necessary powers to investigate the planned sale.

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.

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