Wednesday 15 June 2016 by Company updates

Virgin to raise over A$1bn in equity to strengthen balance sheet


Virgin has announced a fully underwritten A$852m equity raising, following its A$159m equity placement to Chinese conglomerate HNA

Virgin has announced the outcome of its capital structure review, with the key result being a proposed fully underwritten A$852m equity raise.

Five of Virgin’s six major airline shareholders will take up their pro rata entitlements. Interestingly, Etihad is not participating in the equity raise but other airline shareholders, Virgin Group and HNA have made binding commitments to contribute to the sub underwriting of entitlements not taken up by other shareholders.

Together, with the previously announced equity placement to HNA, Virgin is proposing to raise over A$1bn in new equity to strengthen the Group’s balance sheet. To the extent HNA’s equity stake remains less than 19.99% following the equity raise, there is the potential for a further top up equity placement to HNA to achieve a 19.99% stake (subject to  a maximum investment by HNA of US$300m).

This is a materially credit positive announcement, noting the bonds have rallied in recent weeks in anticipation of a fresh equity raise. We expect to see some further (positive) price action on the bond in coming days so please consult with your FIIG representative for updated pricing.

A link to the announcement is available here.External link - opens in a new window

Please contact your FIIG representative for further details on the Virgin US dollar bond. Available to wholesale investors only with a minimum face value of USD10,000.