Virgin Australia Holdings (VAH) will invest A$8 million ($8 million) in Skywest Airlines (XR), giving it a 10% stake in the Perth-based carrier.
According to a VAH statement, the investment will “capitalize on opportunities in regional Australia by supporting further growth of VAH and Skywest’s regional partnership.” It will be made via a convertible facility with XR, which Virgin Australia (DJ) can change to ordinary shares in XR at a conversion price of A$0.45 per XR share with a maturity date of April 15, 2015, and a coupon rate of 7.5% per annum. The deal is pending XR shareholder approval.
“This investment highlights our belief in the growth potential of the Australian regional market and strengthens our partnership with Skywest,” DJ CFO Sankar Narayan said in a statement.
Earlier this year, the Australian Competition and Consumer Commission (ACCC) granted interim approval for a proposed corporate alliance between the two carriers.
“We have grown our regional operations significantly since launching our regional network with Skywest in October 2011 with the commencement of new services to Emerald, Gladstone and Port Macquarie. These services have been highly popular with the flying public and are already among our best performing regional routes,” said Narayan. “The fleet of four new ATR aircraft that we are using to operate these services will increase to 12 by the end of the 2013 financial year, and there is plenty of opportunity to further expand our regional footprint.”
Article Source : ATW Daily News
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