Virgin Australia Holdings Limited (Virgin Australia) today announced that it is undertaking a fully underwritten 5 for 14 pro rata accelerated non-renounceable entitlement offer to raise gross proceeds of approximately $350 million (Entitlement Offer).
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.
Virgin Australia CEO John Borghetti said: "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.
“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”, Mr Borghetti said.
Virgin Australia Chairman Neil Chatfield said: “We are pleased that our major shareholders have indicated their support for the offer. We believe that the support of such a strong and diverse group of leading international airlines demonstrates their confidence in our strategy. Given their substantial shareholdings, the Virgin Australia Board intends to work with the airline shareholders for future board representation with appropriate protocols.
“Virgin Australia has fundamentally changed the way that airline alliances operate and we believe that significant further benefits can be achieved from our alliances as we continue to deepen relationships with our partners”, Mr Chatfield said.
The net proceeds of the Entitlement Offer will be used to enhance Virgin Australia’s liquidity position and for general corporate purposes.
