(Reuters) - Flybe Group Plc has agreed to demands from its largest shareholder to call a general meeting to consider replacing Chairman Simon Laffin following the cut-price sale of the British regional airline.
The U-turn on Monday by Flybe, which had rejected the call by Hosking Partners last week, boosted its lowly shares as much as 30 percent in early trade before paring the gains to trade up 10.7 percent at 3.56 pence at 1040 GMT.
Richard Branson’s Virgin Atlantic, Stobart Group and Cyrus Capital agreed to buy Flybe for an initial 2.2 million pounds ($2.9 million), a far cry from its 215 million pounds valuation when it joined the London Stock Exchange in 2010.
Hosking, which opposes the deal, had last week also called for the appointment of industry veteran Eric Kohn as a director and a probe into the sale process, citing a decline in Flybe’s value and the board’s handling of the sale process.
On Monday, Flybe said it would interview Kohn and make a recommendation on his candidacy for the board to shareholders but reiterated that a resolution for him to investigate the sale process would be ineffective as it was not allowed under the company’s Articles Of Association.
Kohn would “enjoy the usual rights to information and freedoms of action enjoyed by all directors,” it said.
Hosking, which owns almost 19 percent of Flybe, according to Refinitv Eikon data, has said that more than 40 percent of shareholders support Kohn’s appointment as chairman.
Flybe’s original deal with the consortium still requires shareholder approval. The offer was only one pence in cash for each Flybe share, a 94 percent discount to the close the previous day.
A later revision, selling the airline’s main trading company Flybe Limited and online operation Flybe.com Ltd to the consortium for 2.8 million pounds, does not need shareholder backing.
The consortium also agreed to pump in as much as 100 million pounds to keep the airline aloft.
Kohn, currently chairman of Swiss investment banking advisory firm Barons Financial Services, has served on the boards of several airlines and is credited with the successful turnaround of dba, the former German subsidiary of British Airways.
Airlines, struggling with higher fuel costs, currency fluctuations and uncertainties presented by Brexit, have been looking to bulk up via consolidation to tackle the tough market conditions.
Flybe also said on Sunday it had been approached by Stobart’s ex-CEO Andrew Tinkler about a possible alternative financing proposal. However, the airline said the consortium’s offer remained the best option.
Reporting by Arathy S Nair in Bengaluru