Air New Zealand's proposed sale of its 25.99 per cent stake in Virgin Australia could be aided by a Chinese airline operator's new stake in Virgin.
Virgin Australia yesterday announced a deal worth A$159 million ($171 million) with HNA Aviation Group, which is the largest private operator of airlines in China, with a placement of new shares to subsidiary HNA Innovation giving HNA a 13 per cent stake in Virgin.
The shares were issued at A30c each, a 7.1 per cent premium on Monday's closing price. HNA also says it intends to increase its shareholding over time to 19.99 per cent.
Under Australian law, a new shareholder can't purchase more than 20 per cent of Virgin Australia, the country's second-largest domestic airline, without approval. Similarly, an existing shareholder with more than 20 per cent but below 90 per cent can't automatically increase its holding beyond the 3 per cent a year "creep" provision without triggering a full takeover.
In March, Air New Zealand announced it was considering selling its stake in Virgin Australia and had hired First NZ Capital and Credit Suisse to advise on its options. It has not commented since, apart from saying it would like the sales process to be completed by June 30.
