Virgin shares jump after restructure move

Virgin Australia Holdings (ASX:VAH) has announced final approval of a new structure designed to comply with a 1920 law that limits foreign ownership regulations of Australian international airlines, but will allow international investment in its domestic business.

Virgin said in a statement the proposed new structure will facilitate international investment in the domestic business, which will improve liquidity and enhance shareholder value.

The action was triggered by international ownership reaching just under the 49% limit recently.

In February, Virgin proposed a split of its international operations into a separate, unlisted entity that was owned by current shareholders. Virgin Australia International Holdings (VAIH) will hold Virgin’s international airline business.

The distribution and final implementation date is March 30.

The new listed company (VAIH) will become a wholly domestic airline and be freed from the Air Navigation Act 192, which requires all Australian flag carriers operating international services to be no more than 49% foreign-owned.

Virgin today announced to the ASX that an in specie dividend was to be distributed to all shareholders who acquired their shares prior to March 21, on a 1:1 ratio.

VAIH will be owned by existing Virgin shareholders and have a majority independent board of directors, be serviced and funded by VAH, which will mean business as usual in the day to day running of the airline for staff and customers.

The airline has given the shares in the new international business (VAIH) a nominal value of 0.0001 cents.

Sir Richard Branson’s Virgin Group currently holds about 26% of Virgin Australia and Air New Zealand has a 19.9% stake.  At 2.05pm AEDT, Virgin’s shares had jumped 1.51% to 47.2 cents.