Virgin Australia is free to complete its controversial $350 million capital raising after the Takeovers Panel rejected claims the issue of new shares would result in a big change to its ownership structure.
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.