Times Comment Today5 Feb 2019 10:58
Interesting comment from Alistair Osbourne in The Times this morning which very clearly sums up the questions FlyBe are neglecting/refusing to answer:-
Questions for Flybe
At least Flybe puts any Ryanair problems into perspective. The airline’s wings are still on thanks to the sort of inflight manoeuvre that would be barred at most airshows: a deal with Virgin Atlantic, Stobart and Cyrus to flog Flybe’s assets out of the holding company for £2.8 million in return for rescue cash. But it’s a trick that’s understandably outraged investors, leaving them in a quoted shell due to receive just 1p per share — even if the shares closed last night at 3.3p.
About 40 per cent of them, led by 19 per cent holder Hosking Partners, want to sack chairman Simon Laffin and install banker Eric Kohn. And meantime, 12 per cent shareholder Andrew Tinkler has put together a standby deal, apparently lining up £30 million of potential finance.
Yet it risks being a lot of noise about nothing unless investors can find a legal way to block the asset deal due to close on February 22 — and also put in place an alternative that keeps Flybe airborne. And there’s no time for an EGM before then: a point Mr Kohn has made in a letter to senior independent director Elizabeth McMeikan, declining Flybe’s invitation to meet the nomination committee. He wants Mr Laffin out immediately. But he won’t volunteer to go.
Is there room for a compromise, though? As Mr Kohn puts it in his letter: “I can’t understand the resistance to transparency.” And there are heaps of questions that still need answering. How did Flybe lose such control of its cash position that by the start of the year, credit card companies withheld three quarters of its £50 million cash balances? Did the same companies have links with the bidders? And could the bidders have triggered a self-serving situation where the credit card outfits demanded the extra security of an asset sale rather than a conventional takeover, so frustrating any rival bid? Indeed, whose idea was an asset sale: Flybe’s or the bidders’? Mr Laffin would only say a lawyer’s.
Whatever happens, investors want answers. So couldn’t Flybe simply appoint Mr Kohn as a director and let him to do a swift investigation, without Mr Laffin being forced out? Mr Laffin insists he has nothing to hide. If so, what’s the risk?
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