January 30, 2019 / 3:57 PM / 6 months ago

CORRECTED-UPDATE 1-Flybe dismisses top investor call for chairman removal, sale inquiry

(Corrects to say the appointment of Eric Kohn to investigate the sale process, not his appointment as director, would be ineffective in second and sixth paragraphs)

Jan 30 (Reuters) - Flybe Group Plc on Wednesday said its largest shareholder Hosking Partners’ request to oust Chairman Simon Laffin and investigate the British regional airline’s cut-price sale to a consortium “was not a valid request”.

Flybe, which is being bought by Richard Branson’s Virgin Atlantic, Stobart Group and Cyrus Capital for an initial 2.2 million pounds ($2.88 million), also said a resolution to push Flybe’s directors to appoint industry veteran Eric Kohn to investigate the sale process, if proposed, would be ineffective.

Flybe shares slumped 23.9 percent after it responded to the correspondence received from Hosking. The stock was down 3 percent at 4.09 pence at 1525 GMT.

A spokesman for Flybe told Reuters that in order to be valid, an investors request needs to be submitted in the name of the registered shareholder.

“The issue is their shares are held through a nominee and it’s the nominee that’s listed on the share register... It’s quite a technical point, but an important one,” the spokesman said.

The appointment of Kohn to investigate the sale process was not permitted under Flybe’s Articles of Association, the company added.

The carrier said on Wednesday it had invited Hosking to submit a valid request. Hosking owns 18.72 percent of Flybe, according to Refinitv Eikon data.

Hosking, which had asked for a general meeting to consider its resolutions on concerns over the sale process, did not immediately respond to a request for comment. Kohn, currently chairman of Swiss investment banking advisory firm Barons Financial Services, was also not immediately available.

The consortium had offered Flybe only one pence in cash for each Flybe share, a 94 percent discount to the close the day before the offer. The buyers also agreed to pump in as much as 100 million pounds to keep the airline afloat and four days later revised the deal to include the sale of the main trading company, Flybe Ltd, and Flybe.com for 2.8 million pounds.

The airline, like many of its loss making competitors, has struggled with higher fuel costs, currency fluctuations and uncertainties presented by Brexit.

$1 = 0.7649 pounds Reporting by Noor Zainab Hussain and Arathy Nair in Bengaluru; Editing by Bernard Orr

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