This morning, the low-flying shares of Flybe lost up to a quarter of their value. This comes after the board of the struggling airline warned its investors that it would wind up the firm if they do not approve an unpopular takeover.
The shares of the company trimmed their losses to stand 18 percent down at 2.59p as the investors reacted to the ultimatum that was delivered after the market closed yesterday.
Flybe is hoping to sell up to a consortium bid from Stobart Group, Virgin Atlantic, Cyrus Capital, a US private equity firm, for £2.2 million. The deal that would give the shareholders only a penny for each share.
The investors have threatened legal action over the move of the board to accept the bid, however, yesterday, Flybe warned that the shareholders would end up with nothing if they reject the said approach.
A statement that was released by the warned: “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.”
It added: “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.”
A date for the vote of the shareholders is not yet set, however, they will not get a say on a separate £2.8 million sale of core assets to the consortium, with Flybe.com Limited and Flybe Limited set to be sold by the 22nd of February.
The chairman of Flybe could be thrown out by the investors over the Virgin bid in a vote that was pressed for by Hosking Partners, a majority shareholder which wants to replace Simon Laffin with Eric Kohn, a veteran of the airline industry.