Republic Airways Holdings announces it has extended by two weeks an exclusivity agreement to sell its Frontier Airlines business unit to an unnamed buyer.
Republic and the potential buyer, rumoured to be private equity firm Indigo Partners, must reach a definitive agreement on the sale by 30 September, says a Republic media release issued today shortly after the start of shareholders meeting.
“Sitting here today, we have made substantial progress towards reaching a definitive agreement with the buyer and, while we can make no assurances, we believe providing the additional time will allow for the process to be completed,” says Republic’s President and Chief Executive Bryan Bedford in the media release.
“Both parties [are] working diligently to satisfy all remaining conditions of the term sheet,” the company adds in an investor presentation filed today with the US Securities and Exchange Commission.
Today’s shareholder meeting was initially scheduled for 13 August, but executives from Indianapolis-based Republic announced in July that they postponed the meeting until 17 September due to the pending sale of Frontier.
At that time, Republic said it had entered into an “exclusive, non-binding agreement” to sell Frontier.
The company did not say the name of the buyer, but insiders have speculated it is Phoenix-based Indigo.
Indigo, formerly the largest holder of Spirit Airlines shares, sold its interest in that company in July, dumping 12.1 million shares. Then two Spirit board members who are also employees at Indigo resigned from Spirit’s board.
Those moves fueled the theory that Indigo would use proceeds from the Spirit stock sale to scoop up Frontier, which Indigo would transform into an “ultra-low-cost carrier” like Spirit.
Media outlets reported in April that Indigo and investment bank Anchorage Capital Group were both interested in buying Frontier for between $20 million and $50 million.
Republic purchased Frontier in 2009 for $109 million plus $1 billion in liabilities, and then embarked on a plan to transform it into an ultra-low-cost operator.