Virgin Atlantic and Stobart Aviation have established a joint company, Connect Airways, which is to acquire UK regional operator Flybe.
They will equally hold a 60% share of Connect Airways, which will take over the entire share capital of Flybe under a £2.2 million cash offer disclosed by the parties on 11 January.
The offer price is based on a “careful review” of due diligence information, Flybe’s capital requirements, and a “challenging” trading environment, says Stobart.
Connect Airways is also 40%-owned by fund management company Cyrus Capital, through its Luxembourg-based vehicle DLP Holdings.
The three owners of Connect Airways will make available a £20 million bridge loan to support Flybe’s capital needs.
Connect Airways will acquire Stobart Group’s regional airline Stobart Air just before the Flybe takeover.
Once the acquisition of Flybe is complete the Connect Airways owners will also provide another £80 million in funding to invest in the business, as well as a contribution of Stobart Air.
Stobart says the acquisition remains conditional on shareholder and court approval.