Virgin clear to complete $350m raising
The Australian Shareholders Association had accused Virgin of going to "extraordinary lengths" to ensure its three major shareholders - Air New Zealand, Singapore Airlines and Etihad - were able to take up any shortfall of new shares from the raising.
But the Takeovers Panel has ruled the outcome of the capital raising would be to "substantially maintain" the structure of Virgin's share register, implying there will not be a change of control.
Under the entitlement offer, the three airlines could boost their combined stake to as much as 68 per cent. Richard Branson's Virgin Group will also keep its 10 per cent stake in Australia's second-largest airline.
The association's concern was that retail investors faced being "squeezed out" of Virgin, and it sought a removal of the 40 per cent cap on the additional shares they could apply for on top of their entitlements. But the panel decided not to object to the capital raising because it believed any shortfall in shares would be "dispersed effectively" between the three largest shareholders, which are sub-underwriting the entitlement offer.
It also did not take exception to the cap on retail shareholders applying for additional shares.
Qantas has also demanded the federal government block Virgin's capital raising, accusing its three state-owned airlines shareholders of "predatory" behaviour and threatening to cripple its own operations. But the government has shown no appetite to intervene in the raising.
Virgin has threatened to sue Qantas for the accusations it has made as part of what it has labelled an "orchestrated media campaign" to halt the entitlement offer.
It is yet to reveal whether its lawyers have advised it to act on the threat.
Virgin's big-three shareholders have also declared over the past two days a temporary increase in their stakes due to them taking up their share entitlements as part of the institutional component of the capital raising.
Their final holdings will depend on the take-up of shares by retail investors, who have until next Monday to lodge their applications to buy more stock.
Virgin has offered each airline a seat on its board.
Virgin welcomed the decision by the Takeovers Panel, saying it allowed the capital raising to continue as planned on its original terms and timetable.
Shares in Virgin closed up almost 3 per cent at 39.5¢ on Tuesday while Qantas slipped 0.5¢ to $1.225.
Frequently Asked Questions about this Article…
Virgin Australia's $350 million capital raising aims to strengthen its financial position by issuing new shares, allowing major shareholders to maintain their stakes and potentially increase their holdings.
The major shareholders involved in Virgin Australia's capital raising are Air New Zealand, Singapore Airlines, and Etihad, who are also sub-underwriting the entitlement offer.
The Takeovers Panel's decision allows Virgin Australia's capital raising to proceed as planned, ensuring that the ownership structure remains largely unchanged and preventing any change of control.
The Australian Shareholders Association was concerned that retail investors might be 'squeezed out' due to the 40% cap on additional shares they could apply for, but the panel did not object to this cap.
Retail investors in Virgin Australia have the opportunity to apply for additional shares, but their ability to increase their holdings is capped, potentially limiting their influence compared to major shareholders.
Qantas opposed Virgin Australia's capital raising, accusing the state-owned airline shareholders of 'predatory' behavior and urging the federal government to block the raising, although the government has not intervened.
Virgin Australia has threatened to sue Qantas over accusations made during an 'orchestrated media campaign' to halt the capital raising, although it has not yet decided whether to proceed with legal action.
Following the announcement of the capital raising, Virgin Australia's shares closed up almost 3% at 39.5 cents, while Qantas's shares slipped slightly.
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