A consortium led by US commuter carrier Mesa Air has made an 11th-hour bid for Flybe, the airline’s board has confirmed.
Mesa has partnered with private equity investor Bateleur Capital and pledged to pump up to £120 million into the struggling carrier, Sky News reports.
However, the Flybe board on Wednesday (February 20) morning urged shareholders to get behind a deal tabled last month by Virgin Atlantic-led consortium Connect Airways.
According to Sky, the rival US consortium – which also features former Stobart Group chief executive Andrew Tinkler – would inject £65 million new equity into the business at 4.5p-per-share.
Coupled with new debt facilities and asset sales, the deal could provide new funding to Flybe worth about £120 million.
US hedge fund Avenue Capital is also reportedly supporting the Mesa-Bateleur consortium.
The intervention by Mesa et al comes just three days before Flybe shareholders vote on the Connect Airways takeover.
Connect - a consortium comprising Virgin Atlantic, Stobart Group and Cyrus Capital - tabled a £2.2 million one-pence-per-share bid for Flybe on January 11.
The deal was restructured four days later, rising to a value of £2.8 million, to allow Connect to immediately provide £20 million fresh funding to Flybe through a bridging arrangement.
It is understood at least £15 million of this cash has already been provided.
Despite the deal having been restructured, it will not be subject to shareholder approval and is due for completion on Friday (February 22).
In a statement to the stock market on Wednesday, the Flybe board confirmed it had received a “preliminary and highly conditional outline contingency proposal” from Mesa, Bateleur and Tinkler, who earlier this month tabled his own rescue proposal for Flybe.
These conditions, said Flybe, include ditching the Connect bid and agreements being reached with Flybe’s credit card acquirers, banks, lessors, OEMs and pension fund trustees.
“Therefore, the board does not believe the [Mesa/Bateleur] indicative proposal is executable in the timeframe required to enable Flybe to continue to trade,” said the airline.
“Accordingly, 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 [to provide] the security the business needs to continue to trade successfully.
“The arrangements with Connect Airways preserve the interests of Flybe’s stakeholders, customers, employees, partners and pension members.”
There has been dissent among Flybe’s shareholders in recent weeks after the board decided to proceed with Connect’s offer, led by the airline’s largest shareholder Hosking Partners, which sought to depose Flybe chairman Simon Laffin and replace him with Eric Kohn.
Sky reports Flybe investors’ ire with the Connect deal stems from the airline’s decision to reject an approach by Stobart Group last year valuing the company at 40 pence per share.
Flybe shares closed at £0.013p on Tuesday (February 19), giving it a market value of just shy of £3.5 million.