Virgin Australia will be able to complete its controversial A$350 million ($389 million) capital raising after the Takeovers Panel rejected claims it will result in a substantial change to the airline's ownership structure.
The Takeovers Panel ruled today that the outcome of the capital raising would to be to "substantially maintain" the structure of Virgin's share register, implying that there will not be a change of control.
The Australian Shareholders' Association had accused Virgin of going to "extraordinary lengths" to ensure its three major shareholders - Air New Zealand, Singapore Airlines and Etihad - were able to take up any shortfall of new shares from the raising.
The three airlines could boost their combined stake to as much as 68 per cent.
The association's gripe was that retail investors faced been ''squeezed out'' of Virgin, and it sought a removal of the 40 per cent cap on the additional shares they could apply for on top of their entitlements.
But the panel has decided not to object to the capital raising because it believed any shortfall in shares will be ''dispersed effectively'' between the three largest shareholders, which are sub-underwriting the entitlement offer.
It also had not taken exception to the cap on retail shareholders applying for additional shares.
Etihad said on Monday that its stake had risen by just 0.1 per cent following the completion of the institutional component of the capital raising. Depending on the take up by retail investors, Etihad said its ''economic exposure'' could rise by a maximum of 1.8 per cent.
The entitlement offer for retail shareholders closes next Monday.
Last month Qantas demanded the federal government block Virgin's capital raising, accusing its three state-owned airlines shareholders of ''predatory'' behaviour as they attempted to cripple its international and domestic operations.
Shares in Virgin remained unchanged at 38.5 Australian cents this morning.
- Sydney Morning Herald