London – A consortium of Virgin Atlantic Ltd, Stobart Group Ltd and Cyrus Capital Partners agreed to buy British regional airline Flybe Group Plc, Stobart said on Friday, for 2.2 million pounds (2.81 million dollars).
The offer values Flybe at 1 pence per share, a 94 per cent discount to company’s Thursday’s closing price of 16.38 pence.
Shares in the company have risen 12.5 per cent since Flybe first said it was exploring a sale as it tried to cut capacity and costs to grapple with a weak British pound, falling demand, and higher fuel costs.
Flybe, which was advised by Evercore, recommended that its shareholders vote in favour of the deal as the terms were fair reasonable, Stobart said.
The three companies will buy Flybe through a joint venture company called Connect Airways, 40 per cent of which will be owned by Cyrus unit DLP Holdings. Stobart Group’s aviation unit and Virgin Atlantic will each hold 30 per cent.
Connect Airways will also buy Stobart Group’s regional airline and aircraft leasing business and combine the two acquired businesses.
Cyrus, Stobart and Virgin Atlantic said it would provide a 20 million pound bridge loan facility to support Flybe’s ongoing working capital and operational requirements.
The companies also plan to invest up to 80 million pounds in the combined business.