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Flybe shares plunge after airline backs Stobart, Virgin Atlantic joint bid

StockMarketWire.com

Struggling regional carrier Flybe Group said it had agreed to be taken over for a mere £2.2m by a joint venture comprising Stobart Group, Virgin Atlantic and funds managed by Cyrus Capital Partners.

Shares in the company tumbled 77% in early trade.

The joint venture, dubbed Connect Airways, offered 1p for each Flybe share.

Connect Airways also pledged a £20m bridge loan facility to support Flybe's ongoing working capital and operational requirements.

The joint venture was also planning to provide up to £80m of further funding to invest in the business and support its growth.

Investors banking on a takeover tussle for the company, however, were left disappointed.

Flybe chief executive Christine Ourmieres-Widener said that although the company was now running more efficiently, the industry was nevertheless suffering from high fuel costs and economic uncertainty owing to Brexit.

'We have been affected by all of these factors which have put pressure on short-term financial performance,' she said.

'At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.'

'By combining to form a larger, stronger, group, we will be better placed to withstand these pressures.'

Stobart said under the terms of the arrangement its Stobart Aviation unit would sell Everdeal Holdings and Propius Holdings to Connect Airways for a combined £40m.

Story provided by StockMarketWire.com