Flybe investors plan legal fight over 1p deal

Francesca Washtell www.thisismoney.co.uk

Former Flybe shareholders preparing legal action over claims they were misled about airline’s performance before it was sold in cut-price deal

  • Several dozen retail investors want a judge to decide if former directors put out inaccurate statements 
  • The shareholders’ investments were wiped out after they received just 1p per share when it was sold in early 2019 

Former Flybe shareholders are preparing legal action over claims they were misled about the airline’s performance before it was sold in a cut-price deal last year.

Several dozen retail investors want a judge to decide if former directors put out inaccurate statements and overstated how well the company was doing.

The shareholders’ investments were wiped out after they received just 1p per share when it was sold in early 2019 to a group called Connect Airways, which was led by Sir Richard Branson’s Virgin.

The budget airline’s stock had been trading at 16.4p per share, valuing it at £36m, the day before the rescue deal was announced.

But the 1p offer was 94 per cent lower than this and left the amount owed to shareholders at just £2.2m, even though the airline raised another £2.8m by selling assets.

Flybe had put itself up for sale in late 2018 after running into financial difficulties.

Connect bought Flybe, but the airline eventually went bust this year after the coronavirus crisis hit bookings and the Government refused to hand it a £100m bailout loan.

The former shareholders want to claim compensation and have hired a UK law firm to put together a case to see if they can take ex-directors including then-chairman Simon Laffin and chief executive Christine Ourmieres-Widener to court.

One investor, who did not wish to be named, lost £350,000 because of the rock-bottom sale price.

The investor said: ‘First, the impact this has had on me as an individual is irreversible. Life changing measures have had to be made including having to sell assets etc to survive. Mentally this has also been very challenging.’

Another investor said: ‘The use of language, often repeated by the board, to stimulate investment, maximise shareholder value and provide for a stable and positive future for the business, was influential in my decision to invest.’

A spokesman for the law firm said: ‘We are exploring the merits of a potential claim by shareholders against the former directors of Flybe for their alleged misconduct and mishandling of the company’s affairs. We are analysing the prospects of recovery and whether the board has insurance.

‘We will be considering the robustness of the sale process and seeking answers as to how confidential information surrounding terms of the takeover was leaked to the media, which resulted in Flybe having little to no opportunity to mitigate its position.

‘The directors could be potentially accountable for any failure to provide accurate and true statements and failing to act in the best interests of the company and shareholders.’

Laffin and Ourmieres-Widener declined to comment.