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Discovery Capital Management Sends Letter to Spirit Airlines Board of Directors Regarding Proposed Merger with Frontier Airlines

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Discovery Capital Management has urged Spirit Airlines' Board to change the record date for voting on the proposed merger with Frontier Airlines, set for July 15, 2022. Currently, over 55% of Spirit's outstanding shares are unable to vote due to a record date of May 6, 2022. They argue this disenfranchises current shareholders, particularly as JetBlue has continued to enhance its competing bid. Discovery emphasizes that JetBlue's offer is superior and encourages Spirit to abandon the Frontier merger in favor of JetBlue, highlighting potential economic rights loss for shareholders.

Positive
  • JetBlue's increased bids present a potentially more lucrative option for Spirit shareholders.
  • Discovery Capital Management's advocacy aligns with shareholder interests for better economic rights.
Negative
  • Over 55% of Spirit's outstanding shares are potentially disenfranchised due to the outdated record date.
  • Approval of the Frontier merger could lead to a decline in Spirit's stock value, negatively impacting shareholders.

Urges Board to Change the Record Date of Special Meeting to Allow All Outstanding Shares to Be Voted

Implores Company to Abandon Frontier Merger and Accept More Favorable JetBlue Proposal

SOUTH NORWALK, Conn.--(BUSINESS WIRE)-- Discovery Capital Management, LLC (collectively with its affiliated entities, “Discovery” or “we”) today announced that it has sent a letter to the Board of Directors of Spirit Airlines Inc. (NYSE: SAVE) regarding its proposed merger with Frontier Airlines (NASDAQ: ULCC).

The full text of the letter can be found below.

July 12, 2022

Spirit Airlines Board of Directors
Attn: H. McIntyre Gardner, Chairman of the Board of Directors
2800 Executive Way
Miramar, Florida 33025

To The Board of Directors of Spirit Airlines Inc.,

We manage an investment fund that owns 1.4% of the outstanding shares of Spirit Airlines Inc. (“SAVE” or “Spirit” or the “Company”). We are writing you today as we are concerned about the upcoming vote on July 15th for the proposed merger with Frontier Airlines (the “Frontier Merger” or the “Merger”). As stated in the Company’s 8-K dated June 30th, and as initially indicated in May, the record date for voting at the Special Meeting is May 6th, 2022. While we are currently able to vote over 200,000 shares of SAVE stock based upon that record date, we are still unable to vote a substantial portion of our holdings acquired since. We urge Spirit to change the record date to allow all current shareholders to vote at the Special Meeting.

Based on average daily trading volumes of SAVE shares, we estimate that over 55% of the currently held SAVE common stock is likely unable to vote at the Special Meeting as it was acquired after May 6th. This has created a worrisome situation whereby current SAVE shareholders are being disenfranchised of their full economic rights. This has become an even more stark issue as JetBlue (NASDAQ: JBLU) has increased its competing bid for SAVE on multiple occasions. Yet, SAVE’s Board still refuses to recognize the superiority of the JetBlue bid and continues to recommend SAVE shareholders vote for the economically inferior Frontier Merger proposal. Even ISS, the proxy advisory service, agreed as recently as June 28th that the JetBlue bid was ‘more favorable’ than the Frontier proposal, yet it was ‘hesitant to change its earlier stand recommending [them] to vote for Frontier’s offer.’

Additionally, the stale record date has created a perverse voting dynamic. Because the record date is over 60 days ago, and based on the average daily trading volume and aggregate volume traded since May 6th, it is likely that many of those SAVE shareholders eligible to vote at the Special Meeting do not actually own the SAVE shares anymore. This creates an incentive to vote FOR the Frontier Merger, as an approval vote of the Frontier Merger will likely cause SAVE stock to decline, giving voters who do not own the shares a chance to buy back their sold SAVE shares at cheaper prices. With SAVE stock up over 50% since the record date, many current SAVE shareholders have paid higher prices based on the thrice increased JetBlue bid. Yet, a majority of the shareholders eligible to vote likely do not still own the shares!

We urge you to change and update the record date to June 30th to allow current SAVE shareholders to vote at any Special Meeting for the Frontier Merger. This, of course, is only necessary should you not abandon the Frontier Merger and accept JetBlue’s superior proposal----we echo the opinion of ISS that the JetBlue proposal is more favorable, and we implore SAVE management to abandon the Frontier Merger without delay.

Sincerely,

Douglas Ormond, Discovery Capital Management

Cc:

Robert Citrone, Principal, Discovery Capital Management
Adam Schreck, General Counsel, Discovery Capital Management
JetBlue Board of Directors
Robin Hayes, CEO, JetBlue

About Discovery Capital Management

Discovery Capital Management, LLC is an investment manager based in South Norwalk, Connecticut that was founded by Robert Citrone in 1999.

Media

Will Braun / Sydney Gever

Abernathy MacGregor

whb@abmac.com / sng@abmac.com

212-371-5999

Investor

Mallory Close

Head of Investor Relations & Marketing, Discovery Capital Management

203-956-7933

Source: Discovery Capital Management, LLC

FAQ

What is Discovery Capital Management's stance on Spirit Airlines' merger with Frontier?

Discovery Capital Management urges Spirit Airlines to abandon the Frontier merger in favor of JetBlue's superior proposal.

Why is the record date for voting on Spirit Airlines' merger a concern?

The record date of May 6, 2022, disenfranchises over 55% of current shareholders from voting.

What is the significance of JetBlue's bid for Spirit Airlines?

JetBlue's enhanced bids are deemed more favorable compared to the Frontier merger, which Discovery believes would harm shareholder interests.

When is the vote for the Spirit Airlines and Frontier Airlines merger scheduled?

The vote is scheduled for July 15, 2022.

What is the potential impact of the Frontier merger on Spirit Airlines' stock?

Approval of the Frontier merger could lead to a decline in Spirit's stock value, affecting current shareholders.

Spirit Airlines, Inc.

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