ATW Daily News

Toll announces disposal of Virgin Blue stake

Tuesday July 15, 2008

Virgin Blue shares climbed yesterday after majority shareholder Toll Holdings, an Australian logistics company, announced its long-awaited disposal of its 62.7% majority stake in Virgin Blue Holdings.

Toll will distribute 98.3% of its stake in Blue to Toll shareholders by way of a special dividend, while Blue shareholders will benefit from the significantly increased liquidity in Virgin Blue shares.

Virgin Blue CEO Brett Godfrey said, "We see Toll's exit as an opportunity to introduce long-term investors to the company. Despite the difficult trading environment that we are facing at the present, the longer-term outlook for the Group is very strong, and we have a number of new products that will be launched in the coming months, including V Australia" (ATWOnline, April 1).

At the announcement, Virgin Blue also confirmed its guidance provided two months ago that its underlying net profit for the financial year ended June 30 likely will be A$132-A$137 million exclusive of approximately A$40 million of development costs associated with new initiatives scheduled for launch in 2008. It stated further that the company's balance sheet and cash reserves remained strong and, based on current trading conditions, the board sees no requirement for additional equity raisings in the foreseeable future.

The dual announcements should see the recovery of Blue's share price, which has suffered because of ownership uncertainty and widespread negative media based on extremely unlikely "doomsday scenarios" from some analysts (ATWOnline, June 6). It unveiled a A$50 million cost-savings package last month (ATWOnline, June 16).

by Geoffrey Thomas

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