Turbulent turn in Skywest takeover

WHAT a fortnight it has been for Western Australian regional airline and takeover target, Skywest.

Qantas has cut the company from its frequent flyer program, the airline launched a jet service to Exmouth, the State Government has reaffirmed its support for its protected routes policy, the Takeovers Panel forced Singapore-based takeover suitor Capital Vision Capital to amend some of its takeover offer documents, and CVC has requisitioned a meeting of shareholders with one of the key items being the removal of Skywest chairman Pat Ryan.

The shareholder meeting is due to take place by the end of the month.

Mr Ryan told WA Business News that Skywest’s board had sought legal advice and, on the basis of that advice, was in the process of finalising the notice of meeting.

Other matters CVC wants discussed at the meeting include the composition of Skywest’s board.

Skywest has also hit out at CVC’s offer, advising the airline’s shareholders to take no action until its board has had the opportunity to release its response.

On June 1 the Takeovers Panel announced that it would not be making any adverse findings or orders following its investigation of the CVC takeover offer.

The panel was drawn into the takeover battle by Skywest, which had a number of concerns over the bid. Among these were its price (CVC was making a 20-cent-a-share offer while Skywest argued it should be 22 cents), some matters regarding financial arrangements disclosure and the unclear nature of some defeating conditions under the bid.

The panel received some undertakings from CVC and has allowed it to lodge a supplementary bidder’s statement with the Australian Securities and Investments Commission. It also gave CVC an extension on the time limit for despatching a bidder’s statement to shareholders.

While the Takeovers Panel was making its deliberations, the Western Australian Government announced that it would maintain its regulation of non-jet air services in Western Australia, including the allocation of exclusive routes.

Those routes are considered important to the viability of some of Skywest’s operations.

The airline was also rocked by Qantas’ decision to cut it from its frequent flyer program.

Skywest managing director Scott Henderson said the Qantas decision had surprised him, particularly given the increase in Skywest passenger numbers over the past year, but that it would not impact on passenger numbers.

While all of these things have been happening, Skywest has been working on releasing its own long-awaited prospectus to float on the Australian Stock Exchange.

It has engaged ABN AMRO and Patersons Securities as lead managers.

Mr Ryan said the float documents were 95 per cent complete but the CVC meeting requisition had created some complications.

He said the airline was now expected to go to the market by late June or early July.

For its part, CVC is keeping very quiet on what it can bring to Skywest.

In the initial bid document CVC vowed to keep the present executive management and to continue Skywest’s business.

However, CVC executive director Jeff Chatfield’s office met WA Business News’ queries with a "no comment".