A consortium led by Richard Branson's Virgin Atlantic and Stobart Group has agreed an offer to take control of airline Flybe, valuing it at £2.2 million.
The offer values Flybe at 1 pence per share, a 94 percent discount to company’s Thursday’s close of 16.38 pence.
The consortium, which also includes Cyrus Capital Partners, will form a joint venture called Connect Airways which will combine Flybe with Stobart Airways.
It will also provide a £20 million bridge loan to Flybe and £80 million of further funding to the combined group.
The deal will involve the consortium running Flybe's flights alongside those provided by Stobart Air, a subsidiary of the infrastructure group.
For Virgin, the deal will provide it with a network of “feeder” flights from around the UK to support its international business.
Flybe’s shares closed at 16.4p (18.2c) on Thursday evening, giving it an equity value of £36 million (€40m). The deal was first reported by Sky News.
Flybe put itself up for sale last November as it struggled with falling profits, a weaker pound and rising oil prices. Low-cost carrier easyJet had also expressed early interest.
In a profit warning in October, Flybe said it would make a full-year pre-tax loss of about £22 million, against market expectations of a £3.5 million loss, though there was some mitigation in the form of the cancellation of a £10 million provision made in previous accounts. Last year, the company lost £19.2 million. – Agencies