TIDMFLYB
RNS Number : 4317P
Flybe Group PLC
07 February 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION
FOR IMMEDIATE RELEASE 7 February 2019
PUBLICATION AND POSTING OF SCHEME DOCUMENT
FOR THE
RECOMMED CASH OFFER
FOR
FLYBE GROUP PLC
BY
CONNECT AIRWAYS LIMITED
(a company jointly-owned by DLP Holdings S.à.r.l., Stobart
Aviation Limited and
Virgin Travel Group Limited, a wholly-owned subsidiary of
Virgin Atlantic Limited)
TO BE EFFECTED BY MEANS OF A SCHEME OF ARRANGEMENT
UNDER PART 26 OF THE COMPANIES ACT 2006
On 11 January 2019, the Boards of Flybe Group plc ("Flybe" or
the "Company") and Connect Airways Limited ("Connect Airways")
announced that they had reached agreement on the terms of a
recommended cash offer for Flybe by Connect Airways pursuant to
which it is proposed that Connect Airways will acquire the entire
issued and to be issued share capital of Flybe (the "Acquisition"
and the "Announcement"). The Acquisition is to be effected by means
of a scheme of arrangement under Part 26 of the Companies Act 2006
(the "Scheme") and is subject to the terms and conditions set out
in the scheme document in relation to the Acquisition (the "Scheme
Document").
The Scheme Document is being sent, or made available, to Flybe
Shareholders today. The Scheme Document contains, amongst other
things, a letter from the Chairman of Flybe, the full terms and
conditions of the Scheme and the Acquisition, an explanatory
statement, notices convening the Court Meeting and the General
Meeting in connection with the Scheme, an expected timetable of
principal events and details of the actions to be taken by Flybe
Shareholders. The Scheme Document is available on Flybe's website
at www.flybe.com/investors/strategic-review-formal-sale-process and
posted to relevant Flybe Shareholders.
The information in this announcement is extracted from the
Scheme Document and sets out the background of the Acquisition and
the actions the Flybe Board has taken in order to enable Flybe and
Flybe Limited to continue to trade, thereby preserving the
interests of Flybe Shareholders and stakeholders, including
customers, employees, pension scheme members and other
creditors.
Background to the Scheme
Since the appointment of Christine Ourmières-Widener as CEO,
Flybe had implemented a clear strategy focused on tighter fleet
management, improving revenue per seat performance and increasing
load factors. Flybe's pursuit of operational excellence had led to
a significant reduction in maintenance lead-times and higher
customer satisfaction. Delivering this new strategy required
management to address several material legacy issues such as engine
and aircraft contracts, which significantly increased cash
requirements.
The current broader market for air travel has been challenging
for all parties. There have been a number of airlines who have gone
out of business over the past year and several others have issued
profit downgrades. While Flybe had made tangible progress in
delivering its strategy, maintaining momentum had been hampered by
the challenging market environment. Ongoing fuel and currency
impacts presented particularly significant headwinds for Flybe as
did the rapid and significant tightening on Flybe's liquidity from
the card acquirer market. In addition, the general economic outlook
and conditions had impacted the business leading to a further
weakening in consumer demand, affecting cash, revenues and profit
adversely.
On 17 October 2018, Flybe announced that, due to weak consumer
demand in domestic and near-continent markets, together with higher
fuel prices and a weaker sterling, the Company's profit performance
would be lower than previously expected.
Formal Sale Process
On 14 November 2018, Flybe announced its interim management
report for the six-month period to 30 September 2018 which made
clear that if Flybe's card acquirers were to choose to seek
significantly higher cash collateral and Flybe could not access
sufficient additional liquidity, this would give rise to a material
uncertainty which might cast significant doubt on its ability to
continue trading as a going concern. The Company announced
therefore that it was undertaking a comprehensive strategic review
of its options, including a potential sale of the Company by way of
a Formal Sale Process (also announced on 14 November 2018) and
exploring a move to a Standard Listing to allow the Company more
flexibility in carrying out asset divestments to generate cash. The
latter move was subsequently approved by over 99% of shareholder
votes at a general meeting on 14 December 2018.
Flybe received a number of expressions of interest both before
and after the announcement of the Formal Sale Process. These
expressions of interest included proposals for the acquisition of
Flybe as a whole and also for parts of the business or certain
assets. After initial discussions with the interested parties,
Flybe shortlisted a smaller number of potential offerors to conduct
initial due diligence based on a range of criteria, including
deliverability, financial capability and strategic fit. The
selected potential offerors were asked to submit proposals for
Flybe and subsequently Flybe entered into detailed discussions with
a small number of parties.
These discussions led to the current offer from Connect Airways
when two existing interested parties came together and informed
Flybe of this fact shortly before the Announcement. In addition to
Connect Airways making the offer to Flybe Shareholders, the Connect
Lenders agreed to make available to Flybe and Flybe Limited a
secured committed credit facility of up to GBP20 million, subject
to a number of conditions (the "Bridge Facility"). This facility
was subsequently amended on 15 January 2019 in connection with the
Subsidiary Sale, further details of which are set out below.
Although the price per share offered by Connect Airways was
disappointingly low, its proposal was ultimately the only proposal
capable of immediate execution to enable Flybe and the Flybe
Subsidiaries to continue to trade as going concerns.
Subsidiary Sale
Following the Announcement, despite significant efforts, Flybe
was not able to satisfy the conditions to utilisation of the Bridge
Facility because the Company's credit card acquirers were unwilling
to increase their exposure during the period to the expected
effective date of the Scheme; therefore Flybe was unable to draw
any funds under the Bridge Facility.
In order to enable Flybe Limited to continue to trade and
thereby preserve the interests of Flybe's Shareholders and other
stakeholders (including customers, employees, pension scheme
members and other creditors) Flybe needed immediate funding as well
as the ongoing support of Flybe's credit card acquirers and banks.
Because in the time available there were no other parties in a
position to meet both Flybe's funding needs and the requirements of
Flybe's banks and credit card acquirers, the Flybe Directors
concluded, and were so advised, that the only way to avoid Flybe
and Flybe Limited having to be placed into administration was to
enter into a new agreement to sell Flybe's operating subsidiaries
to Connect Airways, thereby preserving the interests of Flybe
Shareholders and stakeholders, including customers, employees,
pension scheme members and other creditors.
On 15 January 2019, Flybe therefore entered into the Subsidiary
Sale SPA, agreeing to sell the Group's main trading company, Flybe
Limited (including Flybe Aviation Services Limited), and the
digital company Flybe.com Limited to Connect Airways for GBP2.8
million (payable to the Company), subject only to a limited number
of conditions. At the same time the Bridge Facility was revised and
GBP10 million was utilised by Flybe Limited immediately to support
the business, with a further GBP5 million being utilised on 25
January 2019. In addition, in order to improve liquidity, a number
of improved arrangements with Flybe's credit card acquirers and
banks were also reached in conjunction with the Subsidiary
Sale.
The conditions to the Subsidiary Sale SPA are currently being
progressed by the parties with the expectation that they will be
satisfied and that completion of the Subsidiary Sale will occur on
or before the long stop date under the Subsidiary Sale SPA of 22
February 2019.
Relationship between the Scheme and the Subsidiary Sale
At the same time as entering into the Subsidiary Sale SPA, Flybe
and Connect Airways ensured that the Acquisition would proceed
through the Scheme so that Flybe Shareholders would continue to
have the benefit of a cash offer for their Flybe Shares.
Following completion of the Subsidiary Sale, the Company will be
a non-trading entity with no subsidiaries and no material assets
other than the cash remaining from the consideration received under
the Subsidiary Sale SPA, which will be required to cover
transaction costs and residual and rundown costs of the Company. It
is not anticipated that after meeting these costs there will be any
remaining funds available for distribution to Flybe
Shareholders.
Accordingly, following completion of the Subsidiary Sale, if the
Scheme is not approved, the Flybe Directors intend to take steps to
wind-up the Company and Shareholders are likely to receive no value
for their shares in Flybe. Accordingly, the Flybe Directors believe
that the terms of the Acquisition remain in the best interests of
Flybe Shareholders as a whole and unanimously recommend that Flybe
Shareholders vote in favour of the resolutions to be proposed at
the Court Meeting and the General Meeting.
Notices of the Court Meeting and General Meeting
As described in the Scheme Document, the Scheme will require
approval at a meeting of the Scheme Shareholders convened with the
permission of the Court and at the General Meeting. The Court
Meeting and the General Meeting will be held at the offices Bryan
Cave Leighton Paisner LLP, Adelaide House, London Bridge, London
EC4R 9HA on 4 March 2019 at 11.00 a.m. and 11.15 a.m., respectively
(or, in the case of the General Meeting, as soon thereafter as the
Court Meeting has concluded).
Completion of the Acquisition remains conditional on the
approval of the Scheme by Flybe Shareholders at the Court Meeting
and the passing of the special resolution at the Flybe General
Meeting, the satisfaction or waiver of the other Conditions set out
in the Scheme Document and the approval of the Court.
It is important that, for the Court Meeting, as many votes as
possible are cast (whether in person or by proxy) so that the Court
may be satisfied that there is a fair and reasonable representation
of the opinion of Scheme Shareholders. You are therefore strongly
urged to sign and return your forms of proxy or appoint an
electronic or CREST proxy as soon as possible, and, in any event so
as to be received by 11.00 am on27 February 2019 for the Court
Meeting and 11.15 am on 27 February 2019 for the General Meeting. A
Form of Proxy for the Court Meeting not lodged at the relevant time
may be handed to the Chairman of the Court Meeting before the
taking of the poll.
THE FLYBE DIRECTORS STRONGLY ADVISE THE FLYBE SHAREHOLDERS TO
VOTE OR PROCURE VOTES IN FAVOUR OF THE SCHEME AT THE MEETINGS IN
ORDER TO RECEIVE THE CONSIDERATION OF 1 PENCE PER SHARE.
Flybe Directors have irrevocably undertaken to vote in favour of
the Scheme in respect of their own beneficial holdings (and the
beneficial holdings which are under their control and those of
their close relatives) totalling 871,664 Flybe Shares representing
approximately 0.40 per cent. of the issued ordinary share capital
of Flybe as at 5 February 2019 (being the last practicable date
prior to the date of this announcement).
Timetable
The current expected timetable of principal events for the
implementation of the Scheme is set out below and in the Scheme
Document. If any of the key dates set out in the expected timetable
changes, an announcement will be made through a Regulatory
Information Service.
If the Scheme is approved as outlined above, it is expected that
trading in Flybe Shares on the London Stock Exchange's main market
for listed securities will be suspended at 6.00p.m. on the Business
Day prior to the Effective Date. It is intended that, following the
Effective Date, the London Stock Exchange and the FCA will be
requested respectively to cancel trading in Flybe Shares on the
London Stock Exchange's main market for listed securities and to
remove the listing of the Flybe Shares from the Official List, in
each case on the Effective Date.
Date of circulation of the Scheme 7 February 2019
Document
Latest time for lodging Form 11.00 am on 28 February 2019(1)
of Proxy for the Court Meeting
(pink form)
Latest time for lodging Form 11.15 am on 28 February 2019(2)
of Proxy for the General Meeting
(blue form)
Voting Record Time for the Court 6.00 pm on 28 February 2019(3)
Meeting and the General Meeting
Court Meeting 11.00 am on 4 March 2019
General Meeting 11.15 am on 4 March 2019(4)
Court hearing to sanction the 8 March 2019(5)
Scheme
Last day of dealings in, and 8 March 2019(5)
for registration of transfers
of, Flybe Shares
Scheme Record Time 6.00 pm on 8 March 2019(5)
Scheme Effective Date 11 March 2019(5)
Cancellation of the admission 11 March 2019(5)
to trading of Flybe Shares
Latest date for despatch of cheques 25 March 2019(5)
or settlement through CREST (as
appropriate)
Longstop Date 30 September 2019(6)
Notes:
References to times are to London time. If any of the dates
and/or times in this expected timetable change, the revised dates
and/or times will be notified to Flybe Shareholders by announcement
through a Regulatory Information Service.
(1) The PINK Form of Proxy for the Court Meeting not returned by
the time stated above may be handed to the Registrars or to the
chairman of the Court Meeting before the taking of the poll.
(2) The BLUE Form of Proxy for the General Meeting must be
lodged by the time stated above in order to be valid or, if the
General Meeting is adjourned, not later than 48 hours (excluding
any day that is not a Business Day) before the time fixed for the
holding of the adjourned meeting.
(3) If either the Court Meeting or the General Meeting is
adjourned, the Voting Record Time of the adjourned meeting(s) will
be 6.00 pm on the second Business Day before the day fixed for the
adjourned meeting.
(4) The General Meeting will commence at 11.15 am on the day of
the Court Meeting or as soon as possible after the Court Meeting
has been concluded or adjourned.
(5) These dates are indicative only and will depend, among other
things, on the date upon which (i) the Conditions are satisfied or
(if capable of waiver) waived; (ii) the Court sanctions the Scheme;
and (iii) the Court Order is delivered to the Registrar of
Companies.
(6) The Longstop Date is the latest date by which the Scheme may
become effective. However, the Longstop Date may be extended to
such later date as the Company and Connect Airways may agree in
writing (with the Panel's consent and as the Court may approve
(should such approval(s) be required)).
Information for Flybe Shareholders
If you have any questions about the Scheme Document, the Court
Meeting or the General Meeting or are in any doubt as to how to
complete the Forms of Proxy, please call Link Asset Services on
0371 664 0321. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be
charged at the applicable international rate. The helpline is open
between 9.00 am - 5.30 pm, Monday to Friday excluding public
holidays in England and Wales. Please note that Link Asset Services
cannot provide any financial, legal or tax advice and calls may be
recorded and monitored for security and training purposes.
General
Unless otherwise defined, all capitalised terms in this
announcement shall have the meaning given to them in the Scheme
Document.
Enquiries:
Flybe
Christine Ourmières-Widener,
Chief Executive Officer
+44 (0)13 9236 4520
Maitland/AMO (PR Adviser to Flybe)
Andy Donald
Finlay Donaldson +44 (0)20 7379 5151
IMPORTANT NOTICES
You should read this announcement and the Scheme Document and if
you are in any doubt as to the action you should take, consult an
independent financial adviser. In making any investment decision
you must rely on your own examination of the terms of the Scheme
and the Acquisition, including the merits and risks involved. If
you have any questions about the Scheme Document, the Court Meeting
or the General Meeting or are in any doubt as to how to complete
the Forms of Proxy, please contact Link Asset Services on the
number set out above.
Evercore, which is authorised and regulated by the FCA in the
United Kingdom, is acting solely for Flybe as financial adviser in
relation to the matters referred to in this announcement and for no
one else. Evercore will not be responsible to anyone other than
Flybe for providing the protections afforded to its clients or for
providing advice in relation to the contents of this announcement
or any arrangement referred to herein. Apart from the
responsibilities and liabilities, if any, which may be imposed on
Evercore by FSMA, or the regulatory regime established thereunder,
or under the regulatory regime of any jurisdiction where exclusion
of liability under the regulatory regime would be illegal, void or
unenforceable, neither Evercore, nor any of its affiliates, owes or
accepts any duty, liability or responsibility whatsoever (whether
direct or indirect, whether in contract, in tort, under statue or
otherwise) to any person other than Flybe in connection with this
announcement, any statement contained herein or otherwise, and no
representation, express or implied, is made by it, or purported to
be made on its behalf, in relation to the contents of this
announcement, including its accuracy, completeness or verification
of any other statement made or purported to be made by it, or on
its behalf in relation to Flybe or the matters contained in this
announcement. To the fullest extent permitted by applicable law,
Evercore and its affiliates accordingly disclaim all and any
responsibility or liability, whether arising in tort, contract or
otherwise (save as referred to above) which they might otherwise
have in respect of this announcement or any statement contained in
it. Evercore has given, and not withdrawn, its consent to the
inclusion in this announcement of the references to its name and
the advice it has given to Flybe in the form and context in which
they appear.
Neither the SEC nor any US state securities commission or
regulatory authority has reviewed or approved this announcement or
the Scheme. Any representation to the contrary is a criminal
offence in the United States.
OVERSEAS JURISDICTIONS
The release, publication or distribution of this announcement in
or into jurisdictions other than the United Kingdom may be
restricted by law and therefore persons into whose possession this
announcement comes who are not resident in the United Kingdom or
who are subject to other jurisdictions should inform themselves
about, and observe, any applicable restrictions. Flybe Shareholders
who are in any doubt regarding such matters should consult an
appropriate independent adviser in the relevant jurisdiction
without delay. Any failure to comply with such restrictions may
constitute a violation of the securities laws of any such
jurisdiction.
This announcement has been prepared for the purposes of
complying with English law and the Takeover Code and the
information disclosed may not be the same as that which would have
been disclosed if this announcement had been prepared in accordance
with the laws of jurisdictions outside the United Kingdom.
The statements contained in this announcement are not to be
construed as legal, business, financial or tax advice.
NOTES TO US INVESTORS IN FLYBE
Shareholders in the United States should note that the
Acquisition relates to the shares of an English company and is
proposed to be made by means of a scheme of arrangement provided
for under, and governed by, English law. Neither the proxy
solicitation nor the tender offer rules under the US Securities
Exchange Act of 1934, as amended, will apply to the Scheme.
Moreover the Scheme will be subject to the disclosure requirements
and practices applicable in the UK to schemes of arrangement, which
differ from the disclosure requirements of the US proxy
solicitation rules and tender offer rules. Financial information
included in or referred to in this announcement has been or will be
prepared in accordance with accounting standards applicable in the
UK and may not be comparable to financial information of US
companies or companies whose financial statements are prepared in
accordance with generally accepted accounting principles in the
United States.
Flybe and Connect Airways are each organised under the laws of
England. All of the officers and directors of Flybe and Connect
Airways are residents of countries other than the United States. It
may not be possible to sue Flybe and Connect Airways in a non-US
court for violations of US securities laws. It may be difficult to
compel Flybe, Connect Airways and their respective affiliates to
subject themselves to the jurisdiction and judgment of a US
court.
In accordance with normal UK practice and pursuant to Rule
14e-5(b) of the US Exchange Act, Connect Airways or its nominees,
or its brokers (acting as agents), may from time to time make
certain purchases of, or arrangements to purchase Flybe Shares
outside of the United States, other than pursuant to the
Acquisition, until the date on which the Acquisition becomes
Effective, lapses or is otherwise withdrawn. These purchases may
occur either in the open market at prevailing prices or in private
transactions at negotiated prices. Any information about such
purchases will be disclosed as required in the UK, will be
available from the Regulatory Information Service of the London
Stock Exchange available at http://www.londonstockexchange.com.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This announcement contains statements about Connect Airways and
the Flybe Group which are, or may be deemed to be, 'forward-looking
statements" and which are prospective in nature. All statements
other than statements of historical fact included in this
announcement may be forward-looking statements. They are based on
current expectations and projections about future events, and are
therefore subject to risks and uncertainties which could cause
actual results to differ materially from the future results
expressed or implied by the forward-looking statements. Often, but
not always, forward-looking statements can be identified by the use
of forward-looking words such as "plans", "expects", "is expected",
"is subject to", "budget", "scheduled", "estimates", "forecasts",
"predicts", "intends", "anticipates", "believes", "targets",
"aims", "projects", "future-proofing" or words or terms of similar
substance or the negative of such words or terms, as well as
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would",
"might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations. Forward-looking
statements may include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings,
synergies, economic performance, indebtedness, financial condition,
dividend policy, losses and future prospects; (ii) business and
management strategies and the expansion and growth of Connect
Airways or the Flybe Group's operations and potential synergies
resulting from the Acquisition; and (iii) the effects of global
economic conditions and governmental regulation on Connect Airways
or the Flybe Group's business.
Such forward-looking statements involve known and unknown risks
and uncertainties that could significantly affect expected results
and are based on certain key assumptions. Many factors may cause
the actual results, performance or achievements of Connect Airways
or the Flybe Group to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. These factors include changes in the
global, political, economic, business, competitive, market and
regulatory forces, future exchange and interest rates, changes in
tax rates and future business combinations or disposals. For a
discussion of important factors which could cause actual results to
differ from forward-looking statements in relation to the Flybe
Group, refer to the annual report and accounts of the Flybe Group
for the financial year ended 31 March 2018. Each of Connect Airways
and the Flybe Group, and each of their respective members,
directors, officers, employees, advisers and persons acting on
their behalf expressly disclaims any intention or obligation to
update or revise any forward-looking or other statements contained
in this announcement, whether as a result of new information,
future events or otherwise, except as required by applicable
law.
Neither Connect Airways, nor any member of the Flybe Group, nor
any of their respective associates, directors, officers, employees
or advisers provides any representation, assurance or guarantee
that the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually
occur.
No forward-looking or other statements have been reviewed by the
auditors of Connect Airways or the Flybe Group. All subsequent oral
or written forward-looking statements attributable to Connect
Airways or any member of the Flybe Group, or any of their
respective associates, directors, officers, employees or advisers,
are expressly qualified in their entirety by the cautionary
statement above.
RIGHT TO RECEIVE COPIES IN HARD COPY FORM
Any person entitled to receive a copy of documents,
announcements and information relating to the Acquisition is
entitled to receive such documents (including information
incorporated by reference into such documents by reference to
another source) in hard copy form. Such person may request that all
future documents, announcements and information in relation to the
Acquisition are sent to them in hard copy form.
A hard copy form will not be sent to any person unless requested
from Link Asset Services by way of either written request to Link
Asset Services, Corporate Actions, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU or request by telephone on 0371 664 0321.
Calls are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. The helpline is open between 9:30am
and 5:30pm, Monday to Friday excluding public holidays in England
and Wales. Please note that Link Asset Services cannot provide any
financial, legal or tax advice and calls may be recorded and
monitored for security and training purposes.
LEI Number: 5493005SC6523Y8KJF24
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFMGGZNNZGLZM
(END) Dow Jones Newswires
February 07, 2019 12:35 ET (17:35 GMT)
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