Virgin Australia, the country's second-biggest airline, is tapping investors in a cash call worth more than 80% of its market value, aiming to cut debt and cover restructuring costs as it targets lucrative Chinese tourist traffic.
The airline said on Wednesday it would ask shareholders to subscribe to a fully underwritten rights issue worth A$852 million (US$628 million), compared with an existing market capitalisation of about A$1 billion. Shares tumbled as the dilutive impact sank in.
The move should ease a debt pile built up during a costly battle for customers with market leader Qantas Airways.
It also comes as Chinese investors close in on control of nearly 40% of the airline, stoking debate on foreign ownership.
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The airline said on Wednesday it would ask shareholders to subscribe to a fully underwritten rights issue worth A$852 million (US$628 million), compared with an existing market capitalisation of about A$1 billion. Shares tumbled as the dilutive impact sank in.
The move should ease a debt pile built up during a costly battle for customers with market leader Qantas Airways.
It also comes as Chinese investors close in on control of nearly 40% of the airline, stoking debate on foreign ownership.
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