Virgin (VOZ) listing up in the air

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http://www.theage.com.au/articles/20...902115831.html

Virgin listing up in the air
By Scott Rochfort
Sydney
September 11, 2003

Virgin Blue has revealed that its $1.4 billion-plus sharemarket listing
may be grounded until 2004, in spite of its two shareholders finally
reaching agreement on how their holdings will be split in the float.

Ending months of bickering, Patrick Corp announced yesterday an
agreement that will save it many millions of dollars and tighten its
grip over the discount carrier after the float.

Patrick has agreed to pay Sir Richard Branson's Virgin Group $240
million, effectively in exchange for scrapping the controversial
escalation formula that required it to pay Virgin a sliding amount
should the value of Virgin Blue exceed $600 million.

The payment was on top of the $260 million instalment by the Chris
Corrigan controlled Patrick for its half stake in Virgin Blue in March
last year. With the Virgin Blue float valued by analysts at $1.4-$2
billion, the escalation payment could have ranged up to $460 million.

In another concession, Patrick agreed to the issuing of $400 million of
new shares in the event of a float and freeing up 25 per cent of the
airline to the market.

But with Patrick signalling its intention to buy some of the new equity
to keep its holding to at least 45 per cent, questions have been raised
over Sir Richard's future interest in an airline. He will be a minority
shareholder, holding an estimated 30 per cent after the listing.

Sir Richard and Mr Corrigan were unavailable for comment.

Patrick's latest statement to the market is seen as ambiguous by some
analysts, and questions still abound not only over the final pricing of
the float but whether the float will go ahead. Virgin Blue said in a
statement that a float could occur later this year or in 2004.

Virgin Blue's trans-Tasman intentions became clearer yesterday, on the
heels of the Australian Competition and Consumer Commission rejecting
the proposed $490 million alliance between Air New Zealand and Qantas
on Tuesday.

Amid some reservations that greater competition between Qantas and Air
NZ would make it harder for Virgin to operate across the Tasman, Virgin
Blue head of strategy David Huttner said a plane with a red body and
white tail-fin and emblazoned with flypacificblue.com, would most
likely be used around Australia as a piece of advertising.

This would be until Virgin Blue was granted the necessary operating
certificates and slots to fly to New Zealand.

A plane bearing Pacific Blue livery and distinctive Virgin Blue colours
was reportedly seen at the Boeing factory in Seattle.

Mr Huttner said Virgin Blue was yet to lodge its submission for a New
Zealand air operator's certificate, and was yet to decide on whether to
establish its base in Wellington or Christchurch.

Virgin Blue is not permitted to use the Virgin tag outside Australia.

Mr Huttner conceded there was some debate over the use of the Pacific
Blue name, the same as the title of a 1990s TV soap opera about bicycle
cops in Santa Monica, California.

With the Virgin Blue fleet at 35 planes, there are questions on whether
the five aircraft due for delivery by May will carry the Pacific Blue
logo.

Analysts estimate the airline would require four or five aircraft to do
the eight daily return flights to New Zealand (four from Sydney, two
from Melbourne and two from Brisbane).

With Virgin Blue planning to build a temporary domestic terminal at
Auckland, akin to the one it first used in Sydney until last year,
after being refused terminal space by Air NZ, Mr Huttner said: "New
Zealand overall will be a very small part of our operations."

Patrick shares closed 19? higher yesterday at $12.96.
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