Stobart Group Acquires Stobart Air And Propius
Stobart Group has announced that it has reached an agreement with EY, the administrators of Connect Airways Limited, to acquire Stobart Air and Propius. Stobart Air operates regional flights under...
Stobart Group has announced that it has reached an agreement with EY, the administrators of Connect Airways Limited, to acquire Stobart Air and Propius.
Stobart Air operates regional flights under a franchise agreement for Aer Lingus along with the provision of charter and wet lease operations, and Propius is an aircraft leasing business that leases its eight ATR aircraft to Stobart Air.
The businesses were owned previously by Stobart Group before being sold to Connect in February of 2019.
Terms Of The Transaction
The consideration for the transaction is a payment of up to £8.55 million on the following basis:
- an initial consideration of £300,000 payable in cash at completion;
- a deferred consideration of £2 million to be paid no later than December 15, 2020;
- and a contingent deferred consideration up to a maximum of £6.25 million based on the equity value achieved (after disposal costs) on a realisation of value in respect of one or both of the businesses by Stobart Group prior to December, 2023, by reference to: 75% of the first £5 million of equity value being a payment of up to £3.75 million; 50% of the next £5 million of equity value being a payment of up to £2.5 million; and any equity value above £10 million is retained by Stobart Group.
Stobart Air and Propius have actively sought to reduce their cash requirements during the COVID-19 crisis, and Stobart Group expects to fund in the order of €25 million (£21.88 million) over the next 12 months.
The transaction will result in Stobart Group acquiring a 40% voting interest and 75% economic interest in the ultimate holding company of both Stobart Air and Propius (known as Everdeal 2019 Limited), and a 15% shareholding in the company that holds the remaining 60% voting interest and 25% economic interest in such holding company, with the Stobart Air Employee Benefit Trust retaining the balance.
This will provide Stobart Group with an effective indirect economic interest of 78.75% in Stobart Air and Propius.
As part of the transaction, a €20 million loan by the Stobart Group to the holding company of Stobart Air and Propius, and subsequently novated from the Stobart Group to Connect in connection with the Connect Sale, will be novated back to the Stobart Group. This is included within the overall consideration referred to above and the loan then becomes an intra-group matter following the transaction.
"A Viable Future After COVID-19"
Stobart Group CEO Warwick Brady stated, "This transaction allows Stobart Group to take control of the outstanding legacy issues which date back to 2017 when Stobart Air and Propius became subsidiaries of the company. The original strategy to mitigate these issues over time through the combination of the businesses with Connect was impacted by the failure of Flybe and resulting administration of Connect in March 2020. We believe that Stobart Air has a viable future after COVID-19 and are working with Aer Lingus as our franchise partner to place the business on a secure footing and manage the impact of the legacy obligations in a controlled manner."
© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.