Etihad Airways has confirmed it will take up its full entitlements in Virgin Australia’s capital raising.
As a result, the Abu Dhabi-based carrier will maintain its shareholding in Virgin at 21.83 per cent and keep its seat on the board.
“The Etihad Aviation Group board has endorsed a proposal to take up its pro-rata entitlement in the non-renounceable entitlement offer for new shares in Virgin Australia which closes at 5pm AEST today,” an Etihad spokesperson said in an emailed statement on Wednesday morning.
“Etihad Airways is a long-term strategic investor and commercial partner to Virgin Australia, and remains fully committed to the partnership as a shareholder.
“Our comprehensive 10-year commercial agreement, which runs until 2020, is further evidence of our confidence in and support for Virgin Australia, and our commitment to the airline and Australia.”
Ahead of the entitlement offer, Etihad was Virgin’s largest shareholder at 21.83 per cent, followed by SIA (20.09 per cent), Nanshan (19.98 per cent) and HNA (13.04 per cent).
However, SIA could increase its stake up to 25.9 per cent and HNA could lift its shareholding up to 19.99 per cent, depending on the response to the capital raising from other shareholders.
Had Etihad – which serves Brisbane, Melbourne, Perth and Sydney from its Abu Dhabi hub in partnership with Virgin – not participated in the capital raising, its 21.83 per cent shareholding in Virgin would potentially have been halved, Virgin said in a slide presentation on July 6.
Virgin’s other major shareholders – Singapore Airlines (SIA), HNA Innovation (a subsidiary of HNA Aviation Group), Sir Richard Branson’s UK-based Virgin Group and Nanshan Group – had all committed to take up their full pro-rata entitlements in the $852 million capital raising when it was announced on June 15.
However, Etihad said at the time it was still reviewing the capital raising.
Should the offer not be fully subscribed, SIA, HNA and Virgin Group made binding commitments to contribute to the sub-underwriting of entitlements not taken up by other shareholders.
Under the share offer, existing shareholders can purchase one new share for every share they hold at a price of 21 Australian cents per share.
The $852 million share issue, when added to the $159 million share placement with HNA Group, brings the total amount Virgin is raising to $1.011 billion in an effort to pay back a shareholder loan and bolster its balance sheet.
“As a result of the upcoming equity raising, the Group will have a capital structure that is appropriate for its position as a mature, diversified airline group and will be in a stronger position to deliver sustainable growth,” Virgin Australia chairman Elizabeth Bryan said on June 15.