Toll happy for a holding pattern on VB
By Steve Creedy, The Australian | Apr. 15, 2006
A decision on Virgin Blue's future could take up to 18 months in the wake of Patrick Corp's surprise decision to accept the latest takeover bid by Toll Holdings.
While Virgin founder Richard Branson might be keen to start mapping out a future for Australia's second-biggest airline, Toll boss Paul Little made it clear yesterday that he was in no hurry to start carving up the carrier.
Sir Richard has made no secret of his desire to regain a controlling interest in the airline and threw his support behind Toll with that end in mind.
But Mr Little said yesterday that Toll had no immediate plans to sell Patrick's 62.4 per cent stake in Virgin Blue to Sir Richard.
"In fact, it's quite the opposite," Mr Little said. "We believe to maintain our (options) at this stage is in the best interests of Toll and Toll's shareholders.
"And it may take six months, it may take 12, it may take 18 months to decide what to do with that."
Toll's original bid contained a proposal that would have seen 15 per cent of Patrick's stake in Virgin Blue offered to the public, 20 per cent handed to Patrick shareholders and 15 per cent sold to Sir Richard.
But that agreement, which has a break fee of $12.5 million, was effectively superceded when Toll launched a simplified bid for Patrick last month.
Mr Little believes that strategies adopted by Virgin Blue to improve yields and passenger loads have made the low-cost airline a better business than it was when Toll launched its bid.
He said Toll was not obliged to deal with Virgin Blue but there was a willingness to continue to talk to it.
He said the underwriting agreement was effectively out of date.
"Should we wish to move away from it, which clearly we would because Virgin Blue today is a different business to the Virgin Blue business when we put our bid in place, there's a break fee there.
"But the break fee is something that will only be paid if we can't reach some sort of agreement going forward.
"So really to a large extent the ball's in the Virgin Group's camp there."
The Toll boss said he had not had any recent discussions with Sir Richard about the airline and Toll and was in no hurry to begin negotiations.
"Our view going forward is we need to understand this business better," Mr Little said. "It's a business that has a lot of potential for us in terms of the freight compatibility, for both domestic and ultimately international type freight capacity."
Welcoming the deal, Sir Richard said he looked forward to a speedy resolution of the takeover and working with Mr Little to map out the future direction of Virgin Blue.
"It has been a long time since (Patrick boss) Chris Corrigan surprised us with a hostile bid for Virgin Blue," he said in a statement.
"Since then, we have been very vocal about regaining control of the company.
"The only way for us to achieve this was to find someone who had enough courage to take control of Patrick Corp.
"Fortunately, Paul Little had similar aspirations and has successfully achieved a great outcome after what has been a very intense and public fight."
Virgin Blue shares closed up 2c at $1.87 on Thursday, 47c higher than when Toll's bid was first launched.