Corrigan Versus Tricky Dicky

[Hellsbells]

AFR Friday 25th July 2003
Corrigan wins fight over Virgin float
Jul 25 11:22
Giles Parkinson



Chris Corrigan's Patrick Corp has won a major dispute with Richard Branson over the structure of the proposed Virgin Blue stock market float.

An independent arbitrator has ruled that Patrick does not have to sell more than five per cent of its 50 per cent stake, defying a request from its joint venture partner to put more of its holding into the float.

The result means that any initial public offering of Virgin Blue later this year is likely to comprise only 10 per cent of the stock, unless Branson himself decides to sell more of his own stake.

Branson wanted at least 20 per cent of the airline to be offered to the public to raise new money, and even suggested 30 per cent should be floated so that the company got entry into crucial index weightings.

The dispute was referred to an independent Queen's Counsel who ruled that Patrick Corp was only required to sell up to five per cent of its holding in the airline.


Branson, who had hoped to float the airline within a few months, raising new money and welcoming institutional and retail shareholders, now faces a tough decision on whether to sell his own stake and cede control to Patrick.

Virgin Blue earlier this year reported a net profit of $11.3 million for the 12 months to March, treble the result of a year earlier. The profit was struck on revenue of $924.3 million.

Patrick Corp shares gained 29¢, or two per cent, to $13.24 on Friday.

Meanwhile, Branson is focussing on introducing Virgin Atlantic long-haul flights to Australia within the next 18 months via Hong Kong, Malaysia or Singapore.

The move will involve buying new 747 400 aircraft at a cost of about $300 million as well as taking on up to 300 new staff in Australia.

"It's not a cheap investment but it's an investment which we believe is worthwhile and it's taken us some years in coming", he told ABC Tv in an interview this morning.

[karrank]

Better back off Richard, I hear Corrigan is having hosties trained in the middle east by Sandline. They won't make the glossy pages of Ralph magazine...:ugh:

When you sup with the devil its best to use a long spoon...

[Wirraway]

Sat "Melbourne Age"

Branson share plan foiled
July 26 2003
By Scott Rochfort
Sydney

Virgin Blue's proposed $1.5 billion listing looked shaky yesterday, after half-owner Patrick Corp won its battle against Sir Richard Branson's plan to issue new shares to the value of 20 per cent of the airline.

After two months of deliberation, an arbitrator ruled that Virgin Blue had no right to issue the shares, and both sides were bound by an agreement to cut their 50 per cent stakes to 45 per cent to facilitate the public offer.

Patrick bought its 50 per cent for $260 million last year.

There are now questions as to whether Sir Richard will sell down or sell out of his stake.

Shares in Patrick rose 50¢ or 4 per cent to a two-month high of $13.45, then closed up 39¢ at $13.34.

Despite the setback, Sir Richard reiterated that Virgin Blue would be listed in three or four months.

The Virgin founder told ABC Radio he expected the float to attract Australian institutions and members of the public, but the response by some fund managers was lukewarm.

Only 10 per cent of the airline will be offered to the public, unless Sir Richard reduces his stake below 45 per cent.

George Clapham, of ABN Amro Investment Management, said: "The general feeling is that it would be very difficult to see how fund managers will sit as minority shareholders squeezed between Richard Branson and Chris Corrigan."

Mr Clapham said liquidity was a big issue for airline stocks given their high volatility, and it was extremely doubtful that Virgin Blue could repeat its recent strong growth in the domestic market over the next three years.

With the vacuum left by the collapse of Ansett now filled, and Virgin achieving 30 per cent of the domestic market, there are doubts that the airline will manage the same growth when it enters the New Zealand market later this year as planned.

Airlines face a discount war and overcapacity on the trans-Tasman routes.

With Virgin Atlantic's 49 per cent owner Singapore Airlines believed to have part rights to the Virgin name internationally, it is still unclear whether the Virgin Blue name will be used across the Tasman.

It is also not clear what arrangements Virgin Blue has made with the airport authorities in its mooted destinations of New Zealand, Fiji and Vanuatu.

With regard to the dispute between Virgin and Patrick, Virgin Blue chief executive Brett Godfrey said: "All companies have board differences, and we are happy that the shareholders' agreement was designed with an effective tool to break any deadlock without having a negative impact upon the airline."

Meanwhile, Sir Richard said Virgin Atlantic's plan to operate between London and Australian cities - the Kangaroo Route - by 2005 would involve buying new aircraft and employing 300 more staff in Australia.

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