Finance Finance News Virgin Australia to raise $350m

Virgin Australia to raise $350m

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Virgin Australia is raising $350 million from shareholders to reduce debt and provide cash for its new business strategy.

The airline will offer existing shareholders five new shares for every 14 that they currently hold, at a discounted price to their current market value.

“This capital raising is designed to enhance liquidity and the gearing position of Virgin Australia to ensure we are in a stronger position moving forward,” chief executive John Borghetti said in a statement on Thursday.

The airline has been restructuring its business, including an update of its technology, implementing a stronger passenger loyalty program, and increasing its access to global markets.

Mr Borghetti also said Virgin Australia couldn’t provide financial guidance for the current financial year, due to an uncertain economic environment and market volatility.

The company’s major shareholders – Air New Zealand, Singapore Airlines and Etihad Airways – will take up their full entitlement of new shares.

Together, the three overseas airlines hold almost 63 per cent of Virgin Australia’s shares.

That could rise to almost 70 per cent after the issue of new shares.

Richard Branson’s Virgin Group, which holds a 10 per cent stake, will also take its full entitlement.