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Virgin Blue flotation to go ahead
Australian low cost carrier Virgin Blue is poised for a stock market flotation, giving it scope to expand more rapidly.
The announcement will be a further blow to its Australian rival Qantas, which has just had its alliance with Air New Zealand turned down by the Australian Competition and Consumer Commission (ACCC) who argued that it would not benefit consumers.
The airline hopes to raise Aus$400million through the flotation which will take place in Sydney by early next year. The public offering will also put it into Australian ownership, which will allow it to benefit from the treaties covering flights to neighbouring countries.
The news of the impending offering follows the settling of differences between Virgin Group and Patrick Corporation, the two owners of Virgin Blue. A new deal will see Patrick Corp pay Virgin Group a final Aus$240 million for its current shareholding. This will allow for the removal of the so-called ‘escalator clause’ which could have led to Patrick Corp paying a lot more depending on the carrier’s future performance.
In addition, Patrick Corp will no longer have to sell 5% of its shares for the IPO.
Virgin Blue chief executive Brett Godfrey said: “This restructured shareholders agreement fully aligns the interests of our two shareholders and paves the way for us to introduce new equity into our business.”
He added: “This capital raising when undertaken will give Virgin Blue a healthier balance sheet, greater flexibility in how it funds its growth and will put us in an even stronger position to respond to any aggressive action by our competitors.”
See related stories:
10-Sep-2003: Competition body deals blow to Qantas/ ANZ plans
16 May 2003: Virgin Blue triples profits
12 Mar 2002: Virgin Blue sells 50% share to drive expansion
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