Easyjet shareholders who choose to maintain their stake in the airline following Apollo's £5.7bn takeover risk having their investment seized and are highly unlikely to be paid a dividend. Documents filed by Apollo last Thursday indicate that investors rolling their holdings into the new ownership structure could face a "compulsory transfer" of their stake.
Under the terms of the agreement, rolled-over shares will be subordinated. This arrangement allows Apollo to pay itself an annual dividend equivalent to 14 per cent of its stake without distributing any cash to other shareholders. Furthermore, non-EU investors face the risk of their stakes being unilaterally seized by Easyjet's new management to ensure compliance with strict EU ownership regulations, which mandate majority ownership or control by EU investors.
While shareholders will retain the right to vote at future general meetings, they will not have input on director appointments or "investment in Easyjet Group." Both Apollo and Easyjet founder Stelios Haji Ioannu, who hold stakes above a 20 per cent threshold, will steer decisions in these areas. The airline is also set to be loaded with over £3bn of debt to finance the transaction, a development that has led Moody's to place Easyjet's credit rating under review.