Virgin Australia Holdings (VAH) has requested its shares be placed in a trading halt from the commencement of trading today as it embarks on a new equity raising of approximately $350 million.
In a statement to the Australian Securities Exchange, Virgin announced the fully underwritten 5 for 14 pro rata accelerated non-renounceable entitlement offer, saying it was designed to enhance the airline's liquidity and gearing position.
Virgin's major shareholders and strategic partners are supportive of the entitlement offer and will be taking up their full entitlements, the airline said.
"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," the statement added.
Virgin Australia chief executiv eofficer John Borghetti said the capital raising was designed to enhance liquidity and the gearing position of Virgin Australia to ensure its "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," he said.
“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."
Mr Borghetti said the airline reiterated the guidance it on announcement of it 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.