The Chinese group Nanshan has bought a 20% stake in Virgin Australia from Air New Zealand.
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The Australian airline says Nanshan proposes to buy the shares from Air New Zealand.
“The sale will allow Air NZ to focus on its own growth opportunities while still continuing its long-standing alliance with Virgin Australia on the trans-Tasman network”, Carter said.
Virgin Australia is likely to have three airlines and two Chinese companies on its share register. Mr Luxon stepped down from the Virgin board and appointed First NZ Capital and Credit Suisse to help market the stake to potential buyers, which also included HNA, China Southern, Cathay Pacific and Singapore Airlines.
Virgin shares last traded at $0.28.
Air New Zealand had participated with Singapore Airlines, Etihad and Virgin Group in making a $425 million loan to Virgin in March which helped bolster the airline’s balance sheet.
Nanshan Group has stated it will support the outcome of the Virgin Australia capital structure review previously announced on 21 March 2016.
“The Group understands that Nanshan Group will put forward a nomination for a representative on the Group’s board, which the Group will consider in accordance with its corporate governance procedures and policies”, Virgin said.
The sale was subject to regulatory approval from Chinese authorities.
Air NZ’s current 25.9 per cent stake in Virgin is expected to be diluted to about 22.5 per cent because of the Virgin-HNA tie-up, which will include the issue of new Virgin shares.
Air NZ shares were trading up 3 per cent at $2.24 in morning trading.
HNA plans to increase its shareholding in Virgin to 19.99 per cent over time.
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Nanshan Group is a large, privately owned Chinese conglomerate with interests across a diverse range of industries including its own emerging airline, Qingdao Airlines, launched in April 2014. The Kiwi carrier has spent an estimated A$373 million building up and maintaining the Virgin stake since 2011 but faces a considerable loss on that investment.
