Budget airline Flybe shares nosedive despite revised bid from Virgin-led consortium
Flybe shares nosedived again this morning as shareholders reacted to news they will not get a vote on a revised bid for the business from a Virgin-led consortium.
Virgin Atlantic, Stobart Group and US private equity firm Cyrus Capital tabled a £2.8m bid for Flybe Limited and Flybe.com today after Friday’s £2.2m offer for the whole group.
Read more: Flybe shares crash as Virgin-led consortium makes takeover offer
Flybe had recommended shareholders accept Friday’s offer, but its stock tumbled from 16.38p to as low as a few pence as investors expressed their dismay that they would get a return of just a penny per share.
Today shares dropped a staggering 32 per cent in early morning trading to leave stock hovering at 2.8p as Flybe revealed investors won't get to vote on the asset grab.
Once Flybe transfers onto a standard listing on 17 January, shareholders cannot vote on the divestment, which has a long stop date of 22 February.
The troubled airline also revealed today that it failed to meet conditions that would have qualified it to receive a £20m bridge loan from the consortium to stay operational, without detailing which conditions it did not satisfy.
Instead Virgin and Southend Airport owner Stobart, along with their private equity partner, will provide a revised bridge loan of up to £20m, releasing £10m of that today.
The consortium is still committed to providing £80m of further funding to support the business’s growth.
“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,” a statement read.
“This preserves the interests of its stakeholders, customers, employees, partners and pension members.”
The troubled airline, which last week sold its Gatwick airport slots to budget rival Vueling for £4.5m, saw £20m wiped off its market cap after an October profit warning, shredding its 48p per share value to just 11p.
Read more: Flybe profits crash as losses soar
A late 2018 climb to 16p as Virgin reportedly tussled with International Airlines Group over a takeover offer was shattered by the consortium’s eventual low-ball bid last week.
It comes after Stobart Group’s former chief executive, Andrew Tinkler, revealed he has snapped up 12 per cent of Flybe.
Tinkler is in the middle of a legal battle with Stobart.