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China's Nanshan Group to buy Virgin Australia stake from Air New Zealand

by June 9, 2016 General

Chinese conglomerate Nanshan Group is poised to emerge as a major shareholder in Virgin Australia after agreeing to purchase a 19.9 per cent stake from Air New Zealand.

Multiple sources said in a deal poised to be announced on Friday morning, Nanshan will join the ranks of Singapore Airlines, Etihad Airways, fellow Chinese group HNA and Sir Richard Branson’s Virgin Group as an investor in the Australian carrier’s complicated register.

Air New Zealand in March said it would look to sell its 25.9 per cent stake in Virgin Australia. Air New Zealand in March said it would look to sell its 25.9 per cent stake in Virgin Australia. Photo: Glenn Hunt

Air New Zealand placed its 25.9 per cent stake in Virgin up for sale in March after its chief executive, Christopher Luxon, pushed unsuccessfully for other board members to join him in an effort to oust Virgin boss John Borghetti. 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.

HNA last week agreed to buy 13 per cent of Virgin through a share placement at 30¢ a share, subject to Chinese regulatory approvals and announced it intended to build its stake to 19.9 per cent over time.

Air New Zealand had participated alongside Singapore Airlines, Etihad and Virgin Group in extending a $425 million loan to Virgin in March at a time when the Australian carrier needed to fix its balance sheet. Virgin, advised by UBS, is expected to proceed with a capital raising of up to $800 million as early as this month.

More to come