LONDON (Alliance News) - Flybe Group PLC on Tuesday said it has agreed a revised bridge loan with Connect Airways Ltd shareholders and will sell its main trading company and online business for GBP2.8 million to Connect.
Connect is a new joint venture between Stobart Group Ltd, Virgin Atlantic Ltd, and DLP Holdings SARL. DLP will own 40% of Connect Airways, with Stobart and Virgin holding 30% each.
On Friday last week it was announced that Connect is to pay 1 pence per share to acquire Flybe, a deal which values the company at GBP2.2 million.
On Thursday, before the deal was announced, Flybe's shares closed at 16.38p each which gave it a GBP35.5 million market capitalisation. Shares in Flybe were down 47% at 2.18p on Tuesday morning.
As part of the deal, Connect's shareholders had agreed to provide an up to GBP20 million bridge loan to Flybe. However, Flybe was unable to satisfy the conditions of the loan and could not draw from it.
Given this, the boards of the two companies have agreed that Connect will purchase Flybe's main trading company, Flybe Ltd - as well as its digital company, Flybe.com Ltd - for GBP2.8 million. This deal has only a "limited number of conditions".
In addition, the companies have agreed a revised bridge loan of up to GBP20 million to fund Flybe Ltd, with GBP10 million released immediately "to support the business".
Flybe has also reached improved agreements with banks to improve its liquidity.
"The board of Flybe believes that obtaining this revised facility from [Connect shareholders] provides the security that the business needs to continue to trade successfully. This preserves the interests of its stakeholders, customers, employees, partners and pension members," Flybe said.
Connect shareholders have also confirmed to Flybe that plans for Flybe's business still include a combination with Stobart Air, and the shareholders are still committed to providing GBP80 million of further funding.
Flybe will transfer to a standard listing on Thursday, after which the divestment of Flybe Ltd and Flybe.com will not need shareholder approval.
Regardless of the sale of these businesses, the acquisition of Flybe by Connect will proceed.
