PAUL SCOTT comments11 Jan 2019 21:15
Flybe (LON:FLYB)
Recommended cash offer
This is a total disaster for Flybe shareholders, unfortunately. A bid has been agreed, but at just 1p per share. The share price was 16.4p last night. What a pity for shareholders, who have woken up to a 94% loss this morning.
Flybe has been in bid talks for a while, and there were several interested parties - e.g. Virgin, and possibly BA. Press reports suggested that competition between them could result in a decent outcome for shareholders, but sadly not.
The 1p/share bid has come from a consortium of Cyrus (40%), Stobart (30%), and Virgin (30%). They will provide a £20m bridging loan, and up to £80m of additional investment.
Clearly, the financial position of Flybe must have been far worse than management had admitted to the market.
I thought the balance sheet at Flybe looked OK, given its considerable fleet of owned aircraft, being far larger than its debt. However, clearly there must be more to it than that. It looks like the working capital position must have engulfed the company.
My commiserations to anyone who has been hit by this disaster.
EDIT: I see the share price has settled (at c.9:30) at about 3.3p, over 3 times the 1p agreed bid. There must be traders betting on a higher bid being forthcoming. Given that the bid is only just over £2m, there's some logic to this. If shareholders refuse to vote through the bid, then the bidders might up their offer, which would be relatively small beer compared with the £100m investment they mention to revitalise the business.
Or a higher competing bid might come along? I'm steering well clear, as this is far too high risk now the true state of the company's financial predicament has become apparent. The bidders might stick to their 1p offer, and allow it to go into administration if shareholders reject that.
Now that shareholders are all but wiped out, the only thing that really matters is that jobs & the service to customers survive under new ownership. It hasn't worked as a listed company, obviously. The turnaround plans, over many years, just didn't work.
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