The firm behind a bid for Stobart Air has alerted police in the Isle of Man to concerns it has about documents supplied by one of the possible backers of the acquisition.
According to a report in the Daily Telegraph, start-up virtual airline Ettyl confirmed that it “raised concerns with the Isle of Man Constabulary as soon as it became aware of an issue with the paperwork… [and] is now in discussions with potential alternative providers of finance”.
The planned sale of Dublin-based Stobart Air, which operates the Aer Lingus Regional service on a franchise basis, had already been thrown into doubt last month over Ettyl’s ability to fund the deal.
Stobart’s UK owner, Esken, had reached agreement in April to sell the business to Ettyl, which is headed by 26-year-old entrepreneur and investor Jason Scales, who has no track record in the aviation business.
But the London-listed company told investors in late May that Ettyl’s financing for the transaction had fallen through and Mr Scales was seeking funds elsewhere.
“Esken is investigating these matters and seeking further information, including with regard to the impact this may have on the ability of Ettyl to finance the transaction and obtaining the change of control consents required in order to complete the transaction. Esken is discussing this matter with its lending banks given banking facility consent for the sale has been obtained.” said Esken in a statement to the UK stock exchange.
Completion of the sale would help relieve Esken of some heavy financial burdens after a very difficult period for the company due to the Covid-19 pandemic.
Stobart Air made a €36.8m loss last year, with continued losses in 2021 pushing its net liabilities to €68.5m at the end of last March, according to accounts just filed for its immediate holding company.
The airline operated just 5pc of its usual operating schedule in the second quarter of 2020. It continued to fly publicly-funded public service obligation routes from Dublin to Kerry and Donegal.
Stobart Air has a contract to operate the Aer Lingus Regional service until the end of 2022. Aer Lingus has named Conor McCarthy’s fledgling Emerald Airlines as the preferred bidder for the service after that date.
Ettyl agreed to pay a nominal £2 for Stobart Air, plus the value of any cash on the balance sheet upon completion. A contingent consideration of £7.5m is payable if certain trigger events occur at any point up to July 2024.
Upon completion of the Stobart Air sale, Esken is due to make a payment of £9.4m and would be responsible for the settlement of pre-completion liabilities totalling £25.8m (€30m).