The board of Flybe has rejected an alternative funding proposal to secure the airline’s future from former Stobart Group boss Andrew Tinkler.
In a trading update issued on Monday morning (February 4), the board confirmed it had received a “very preliminary, short and highly conditional contingency proposal” from Tinkler, who bought a 12% stake in Flybe last month.
The proposal, the board said, comprised a capital injection and funding to replace that offered by Virgin Atlantic-led consortium Connect Airways.
“Flybe confirms its advisers have held an initial discussion with Mr Tinkler’s advisers in relation to the preliminary proposal and that no formal proposal was made,” said the board.
“For the avoidance of doubt, the preliminary proposal does not contemplate an offer for the whole of Flybe or any other acquisition structure.
“The board understands the capital injection under the preliminary proposal would only be provided by Mr Tinkler if the sale of Flybe’s operating businesses to Connect Airways, in accordance with the share purchase agreement dated January 15, 2019, does not complete.
“The board does not consider the preliminary proposal offers the certainty required to secure the future of Flybe.”
Last month, Connect Airways agreed on January 11 a £2.2 million one-pence-per-share deal for the embattled regional carrier. This later increased to £2.8 million after the deal was restructured to allow Connect to provide immediate funding to Flybe and ensure it could continue trading.
Connect, the trading update confirmed, has now provided the first £15 million of its proposed £20 million credit facility, and has signalled its intention to provide up to £80 million further funding as per its original offer of January 11.
“The board emphasises to shareholders it continues to regard the arrangements entered into with Connect Airways as being the only viable option available to the company which provides the security the business needs to continue to trade successfully,” the update added.
“The arrangements with Connect Airways preserve the interests of Flybe’s stakeholders, customers, employees, partners and pension members.”
A long-stop date of February 22 has been set.
Meanwhile, Flybe has confirmed it has now received a “valid request” from largest shareholder Hosking Partners, which is understood to own about a 19% stake in the airline, to convene an extraordinary general meeting to propose replacing director Simon Laffin with Eric Kohn.
Hosking want Kohn to conduct an investigation into the Connect takeover. Flybe says it has informed Hosking Partners its attempt would be “ineffective” as “the company’s articles of association do not confer on members the necessary powers".
Flybe’s board has previously come out in support of Laffin, stating he had its "full confidence".