Virgin Australia launches $350 million equity offering

Dino D'Amore
By Dino D'Amore November 14, 2013 18:24

Virgin Australia launches $350 million equity offering

Virgin Australia Holdings (Virgin Australia) is undertaking a fully underwritten 5 for 14 pro rata accelerated non-renounceable entitlement offer to raise gross proceeds of approximately $350 million. Entitlements are offered on a 5 for 14 basis at A$0.38 per share (approximately 925 million new ordinary shares) to eligible shareholders.

Virgin Australia’s major shareholders and strategic partners are supportive of the Entitlement Offer and will be taking up their full entitlements. Air New Zealand, Singapore Airlines and Etihad Airways will also sub-underwrite the Entitlement Offer or commit to increase their economic exposure via cash settled derivatives.

Eligible retail shareholders who take up their entitlements in full may also apply for additional New Shares beyond their Entitlement up to 40% of their Entitlement, subject to the limitations and scale-back discretion detailed in the Retail Offer Booklet.

Air New Zealand has committed to take up its Entitlement and will provide a sub-underwrite for up to 25.5% of the post Entitlement Offer issued share capital.

Etihad Airways has committed to take up its Entitlement and will enter into an agreement that may result in an increase in its economic exposure of up to 22.2% of the post Entitlement Offer issued share capital.

Singapore Airlines has committed to its Entitlement and will enter into an agreement that may result in an increase in its economic exposure of up to 22.1% of the post Entitlement Offer issued share capital.

Virgin Group: has committed to take up its Entitlement and remain a 10% shareholder ranking.

New Shares will rank equally with existing shares from the date of allotment.

The equity raising of approximately $350 million will de-gear Virgin Australia’s balance sheet and improve liquidity.

“This capital raising is designed to enhance liquidity and the gearing position of Virgin Australia to ensure we are in a stronger position moving forward,” said Virgin Australia CEO John Borghetti. “It will provide the Group with additional flexibility and resilience, enabling us to consolidate initiatives as part of the Game Change Program strategy. We have recently executed and continue to explore a number of balance sheet initiatives including the sale and leaseback of our aircraft hangar at Brisbane Airport in June 2013 and the successful pricing of a US$797.3 million Enhanced Equipment Notes offering in October 2013.

“We reiterate the guidance we provided when we announced our 2013 financial year results in August. Given the ongoing uncertain economic environment, competitive challenges and market volatility, we are unable to provide profit guidance for the 2014 financial year at this time,” Borghetti said.

Goldman Sachs and UBS are joint bookrunners on the sale, which was launched today at a very small discount to par. The Retail Entitlement Offer is open to eligible retail shareholders from 9am (Sydney time) November 25, 2013 to 5pm (Sydney time) December 9, 2013. It will be interesting to see how the sale develops.

Dino D'Amore
By Dino D'Amore November 14, 2013 18:24
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