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Air New Zealand [NZX: AIR] will take up its full entitlement in a Virgin Australia Holdings rights issue, at a cost of between A$81 million and A$116 million.
The Auckland-based carrier, which has agreed to sub-underwrite the issue together with the Australian airline’s other major shareholders Singapore Airlines and Etihad Airways, said its shareholding in Virgin Australia could rise to 25.5 percent from 22.9 percent should it receive its full entitlement.
Virgin Australia, which competes with Qantas Airways in Australia, is seeking to raise A$350 million as part of the rights issue to strengthen its balance sheet as it builds its position in the Australian domestic and international airline markets. Air New Zealand has been impressed with Virgin and continues to endorse its strategy, chief executive Christopher Luxon said today.
The completion of the rights issue will terminate Air New Zealand’s undrawn shareholder term loan facility of A$38 million, the company said.
Air New Zealand has invested in Virgin since 2011, providing it with links to its flights into Australia, following the failure of its Australian-based airline Ansett in 2001.
Shares in Air New Zealand slipped 2.4 percent to $1.63, having gained 29 percent this year. The stock is rated a ‘buy’, according to the Reuters consensus of six analysts. Some 74 percent of the stock is owned by the government which plans to sell some of the shares as part of its policy to sell minority stakes in state assets.
(BusinessDesk)
Tina Morrison
Thu, 14 Nov 2013
Thu, 14 Nov 2013
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Air NZ to take up Virgin rights for stake of up to 25.5%
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