- Frontier Group Hldgs Inc
- 29 January 2025 15:03:13
Source: Sharecast
Faced with mounting losses and debts, the low cost carrier filed for Chapter 11 bankruptcy protection in November. It delisted from the New York Stock Exchange shortly after.
At the time, Florida-based Spirit said it would operate as normal throughout the process, which it expected to last until early 2025.
Earlier this month, however, Frontier made a takeover approach for the airline, its second in just under three years. It offered Spirit shareholders $400m in debt and a 19% stake in Frontier, giving the proposal an implied consideration of $2.16bn.
In a letter sent to Spirit, and made public on Wednesday, chief executive Barry Biffle and chair Barry Franke said there was “compelling industrial logic” to a tie up.
They argued it would create "meaningful value" for Spirit stakeholders, and that they "stand ready to negotiate any and all parts of this offer after receiving a substantive response from you".
But they warned: "We continue to believe that under the current standalone plan, Spirit will emerge highly levered, losing money at the operating level, and this would not be a transaction we would pursue. As a result, time is of the essence."
However, Spirit has rebuffed the approach, and said instead it remained committed to emerging from bankruptcy proceedings following a hearing scheduled for 13 February.
It said Frontier's proposal would deliver less value to stakeholders than its own plan, was “uncertain” as to when it would complete and required noteholders to invest $350m in equity, “which they were not willing to do based on the terms of the proposal”.
Under Spirit’s restructuring plan, creditors will receive $840m in secured notes and own all of Spirit’s equity.
Spirit and Frontier first held merger talks in 2022, but JetBlue then came in with a higher bid. The deal was blocked last year, however, on anti-competition concerns.