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SYDNEY—Toll
Holdings Ltd. plans to spin off its stake in Virgin Blue
Holdings Ltd., Australia’s second-biggest airline,
restoring founder Richard Branson as the carrier’s
largest shareholder.
Tolls,
Australia’s largest freight hauler, will distribute most
of its 62-percent stake in Virgin Blue to shareholders,
the Melbourne-based company said in a statement Monday.
Branson’s Virgin Group Ltd., which started the carrier,
will retain its 25.5-percent holding in the
A$531-million ($514 million) airline.
The
spinoff comes three months after Toll scrapped a planned
sale of the stake, which has slumped 66 percent since
being acquired in the 2006 takeover of Patrick Corp.
Virgin Blue slashed profit forecasts and cut routes
after jet-fuel prices doubled the past 12 months. Global
airlines may report their worst year since 2003 as fuel
costs surge and economies slow.
The plan
“leaves Toll’s books clean for investors,” said Angus
Gluskie, who helps oversee the equivalent of $500
million at White Funds Management in Sydney, including
Virgin Blue and Toll shares. “It lets investors sit in
for the longer haul on Virgin, to get to a better point
in the airline cycle. Or, if they aren’t prepared to do
that, they can sell.”
Toll
climbed 3.1 percent to A$6.58 in early-afternoon trading
Monday in Sydney. Its stakeholders will get one Virgin
Blue share for every share held, the Brisbane-based
carrier said in a statement.
Virgin
Blue’s underlying profit fell as much as 39 percent to
A$132 million in the year ended June 30, 2008, matching
its April forecast, it said Monday. Fuel accounted for
about 35 percent of the costs.
The
company controls about 35 percent of Australia’s
aviation market, trailing Qantas Airways Ltd. It
operates 55 aircraft that complete 2,200 flights a week
and employs about 4,200 people.
The
airline was little changed at 50 Australian cents in
Sydney trading. It’s the third-worst performer on the
37-member Bloomberg World Airlines index this year.
Toll,
which operates logistics services across more than 45
Asian countries, offered to sell control of Virgin Blue
to Branson in 2005 as part of its A$6-billion,
eight-month takeover battle for port and rail owner
Patrick.
Virgin
Blue began flying in Australia in August 2000 before
Branson sold a 50-percent stake in the carrier to
Patrick in 2002. The airline was valued at A$2.3 billion
when it listed on the Australian stock exchange in
December 2003.
“Virgin
Group remains a long-term committed cornerstone
shareholder in Virgin Blue and has a high degree of
confidence in Virgin Blue’s business model and future,”
Branson said Monday in a statement.
Still,
the greater free-float may tempt investors to consider
an offer for the carrier, said Gluskie. A group led by
Macquarie Bank Ltd. unsuccessfully bid for Qantas in
2006.
“It’s
certainly possible other parties might look at those
shares with strategic interests,” said Gluskie.
Toll
will book a A$1.3-billion charge against earnings, it
said. The company will also allot A$330 million to pay a
special dividend. Net debt after the transactions will
be A$650 million.
The
price of jet fuel has about doubled in the past year,
reaching a record $181.85 a barrel on July 3 in
Singapore, according to Bloomberg data. It rose 3.5
percent to $175.75 on July 11.
Carriers
worldwide may report combined losses of as much as $6.1
billion in 2008, the International Air Transport
Association, whose members account for 93 percent of
international traffic, said June 2. That would be the
biggest loss since 2003 and compares with an April
forecast for a $4.5-billion profit. (Bloomberg) |
