US airline values itself at $1 bn and seeks to raise up to $320 mn in listing
Virgin America, partly owned by Richard Branson, plans to raise as much as $320 mn in an IPO that values the US airline at $1 bn, according to a company filing with the SEC.
Virgin America is offering 13.3 mn shares at $21-$24 each in an IPO and, along with investor Cyprus Capital Partners, will sell an additional $52 mn worth of shares in a private placement at the same time, the filing states. The company, which flies to 21 airports in North America with a fleet of 53 Airbus A320 airplanes, says it will use the money raised from the IPO for capital expenditures, debt and other uses.
‘From the more than 13 mn shares of common stock we are selling in this offering, we will retain net proceeds of $219.6 mn for general corporate purposes, including working capital, sales and marketing activities, general and administrative matters, and capital expenditures including future flight equipment acquisitions, as well as for certain aircraft operating lease obligations,’ the company says in the prospectus filed with the SEC.
The Virgin America IPO comes days after Virgin Galactic’s SpaceShipTwo crashed seconds after launch. One test pilot died in the crash and another was injured after managing to parachute to safety. Virgin Galactic, owned by Branson, aims to launch commercial space tourism as early as next year. An investigation into the crash could take as long as a year.
The Virgin America IPO also comes as a series of companies cancel or delay listing plans due to renewed volatility in the markets. At least 14 firms have delayed IPOs in North America alone since late September, according to a tally from the Financial Times late last month. Several deals have also priced below expectations in the past month or so.
In the first 10 months of the year, the number of IPOs priced rose 39 percent from the same period last year to 315, according to data from IPO ETF manager Renaissance Capital. At the same time, proceeds raised increased 60 percent to $166.2 bn. Much of the increase stemmed from Alibaba’s $25 bn IPO in September, however, and activity has slowed since then.
