DJ Staff to get full allocation applied for
AAP
Sunday December 7, 04:37 PM
Virgin Blue stocks tipped to jump
Shares in Virgin Blue Holdings are expected to take off when it debuts on the Australian Stock exchange on Monday with analysts predicting increases of up to six per cent on its issue price.
After closing more than 10 times oversubscribed, Virgin Blue, owned by Sir Richard Branson's Virgin Group and Australian transport logistics company Patrick Corp, have set the final price for shares in its initial public offering at $2.25 each giving the company a market capitalisation of $2.3 billion.
CommSec senior analyst Craig James said the stock had grabbed investor imagination was expected to debut at a "reasonable premium" before hitting between $2.35 and $2.40 a share during the day.
"A number of floats this year have come on with high expectations which have been somewhat dashed," Mr James said.
"But Virgin has got all the indications of coming on at a reasonable premium to the issue price.
"The float seems to have grabbed the imagination of investors.
"Virgin is one of the most efficient budget airlines in the world with a very good reputation amongst the travelling public in Australia and investors want to be part of the story."
Mr James said strong support from staff - Virgin have said 94 per cent of staff responded to the initial public offer - showed their confidence in the carrier and boded well for Virgin's long term success.
"We believe Virgin will remain a very competitive threat to Qantas even when the Qantas discount carrier comes on next year," he said.
Virgin Blue said despite the massive oversubscription, staff would receive 100 per cent of shares requested.
Virgin Blue email subscribers and valued customers would receive the minimum $5,000 of shares and 50 per cent of any shares applied for after that.
General public would receive the $5,000 minimum application and 25 per cent of all extra shares requested, a spokeswoman for the carrier said.
A percentage break down of the shareholding will be released before the stock goes on the market at noon on Monday, she said.
Sir Richard, who was considering selling down his stake in the carrier to between 29.1 and 25.1 per cent, has opted over the weekend to keep just 25.1 per cent, in response to requests from institutions for greater liquidity in the stock.
This would raise Virgin's equity to more than $600 million and help the carrier take on Qantas' low-cost offshoot Jet Star, due to take to the skies in May next year.
Sir Richard, who provided the seed capital of $10 million to help found the airline three years ago, has already had to sell down his stake in the airline to allow for the float, because of Patrick's insistence on maintaining a 45 per cent threshold.
Sir Richard, who has been appointed life president of Virgin Blue but will not sit on the board, said the company had kept the share price within the indicative range to promote trading after the float.
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Sun "The Guardian" London
Branson fills his war chest
Heather Tomlinson
Saturday December 6, 2003
The Guardian
Sir Richard Branson is to net A$300m (£128m) from the imminent flotation of Virgin Blue, his low-cost Australian airline.
A spokesman said the
entrepreneur had admitted that he was sitting on a "war chest of cash" that he would use to expand his other businesses and for acquisitions, possibly in the UK.
Yesterday Virgin Blue said the flotation would be set at the highest share price in the range, A$2.25, valuing the company at A$2.3bn. It said that demand was 10 times the number of shares on offer. The shares will start trading on the Australian Stock Exchange on Monday.
It was initially unclear exactly how many of his shares Sir Richard would sell. However, Will Whitehorn, the entrepreneur's official spokesman, said his boss would sell down his 46% stake to 25.1%, and the net proceeds would be A$300m. He added that Sir Richard's investment had been A$10m since it was set up in August 2000.
Virgin Blue is also raising A$400m to fund expansion into New Zealand and the South Pacific rim.
Sir Richard previously sold half of the business to Australian transport group Patrick Corp and netted A$520m. He will also receive millions of pounds in royalty payments from the airline for the right to use the Virgin brand.
Mr Whitehorn said the cash pile would be used to expand Virgin Mobile in the US and into Canada, as well as launching a low-cost airline in the US in the second half of next year. He is considering acquisitions in transport and financial services and is also looking at setting up radio stations in Japan and Australia.
"One of the intentions is to maintain a war chest to take advantage of opportunities," said Mr Whitehorn. "He is sitting on quite a war chest of money at the moment. He is in quite a strong position, probably one of the strongest he has ever been in his working history."
He would not specify the amount of cash, only that it was "hundreds of millions".
Virgin Blue has been battering Australian flag carrier Qantas on its home turf and now says it has 30% of the domestic market. It underlines the success of low-cost, no-frills airlines when pitted against the traditional airlines.
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