Virgin secures $623 million loan for Velocity buy-back

Virgin secures $623 million loan for Velocity buy-back

Virgin Australia (ASX: VAH) has secured a $623 million unsecured loan to buy-back a chunk of its frequent flyers program Velocity.

The unsecured Notes are due in 2024, with the loan to be used to buy Affinity Equity Partners' 35 per cent minority interest in Velocity Frequent Flyer Holdco, worth around $700 million.

The company has also announced the Foreign Investment Review Board has given the airline approval for the acquisition of the 35 per cent of Velocity.

As part of the funding strategy for the Velocity acquisition, Virgin intends to make an offer to list some of the loan on the ASX, subject to market conditions.

Any such offer would be made pursuant to a prospectus that would be lodged with the Australian Securities and Investment Commission.

The airline posted an underlying loss of $71.2 million in FY19, weighed down by adverse market conditions in the second half, new route investments and higher fuel costs.

The disappointing results led Virgin to announce it would be slashing 750 jobs in an attempt to save around $75 million.

Shares in Virgin are down 3.12 per cent as the market opens this morning.

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Business News Australia

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