preopen; another takeover offer?, page-7

gets $164 million dividends from vba Smart move by Corrigan.


Virgin Blue Pays Dividend, Helps Corrigan Thwart Toll
Nov. 16 (Bloomberg) --

Virgin Blue Holdings Ltd., which posted a 52 percent plunge in second-half profit, announced its first dividend payment in five years, in a move that bolsters the largest shareholder Patrick Corp.'s defense against a takeover.

The airline will pay a dividend of A$262 million ($192 million), or 25 cents a share, according to Brisbane, Australia- based Virgin Blue. The airline, founded by U.K. billionaire Richard Branson, said profit fell to A$30 million in the six months ended Sept. 30, from last year's A$63 million.

The payout, more than double the airline's annual profit, gives Virgin Blue Chairman Chris Corrigan's Patrick Corp. almost A$164 million in cash to defend the hostile takeover by Toll Holdings Ltd., based on Bloomberg's calculation of Patrick Corp.'s holdings filed in April. The dividend, supported by Corrigan, was opposed by Virgin Blue's chief executive and two directors of the airline's 10-person board.

``One of the reasons it may have been done is to make it a little bit more difficult for the Toll takeover,'' said Steven Marsh, who owns Patrick and Toll shares among the equivalent of $403 million he manages at Trust Co. of Australia in Sydney.

Toll Holdings, Australia's largest freight company, has been embroiled for three months in an A$4.69 billion takeover tussle of Patrick Corp., the nation's largest port operator. Toll's Chief Executive Paul Little wants to buy Patrick Corp. to control the flow of goods in Australia from their arrival at ports to final delivery.

Patrick Corp. rejected Toll's takeover offer, saying it has better value as a standalone company.

``Toll may come back with a slightly revised offer and maybe this is something to sharpen their thinking,'' Trust Co.'s Marsh said.

Earnings Slump

Patrick Corp. owned 655.82 million Virgin Blue shares as of April, or 62.6 percent of the airline, according to latest filings on Bloomberg. Branson's Virgin Holdings SA owns 25 percent of the carrier.

Virgin Blue's second-half net income fell as jet fuel price rose to records and competition with Australia's largest airline Qantas Airways Ltd. drove down ticket prices.

Virgin Blue Chief Executive Brett Godfrey, who opposed paying a dividend, has been trying to halt the airline's earnings decline by winning more-lucrative business and government travelers from Qantas.

Virgin Blue yesterday started a rewards program, giving passengers the opportunity to redeem international flights with Virgin Atlantic Airways and Emirates Airlines.

Takeover Tussle

Branson in August said he was frustrated by the five-year- old airline's delay in introducing a rewards program and the decision not to hedge its fuel costs. The airline today said it had ``some'' fuel hedging in place in the first quarter.

Under Toll's takeover plan of Patrick Corp., the merged company would cut its Virgin Blue stake to as little as 10 percent and let Branson raise his stake to 41 percent.

``It appears to be a case of Patrick using its power as the largest Virgin Blue shareholder to put money into its own pockets,'' Melbourne-based Toll said in a statement e-mailed to Bloomberg News today. ``It is once again evidence of Patrick's lack of vision and ill-conceived defense strategies.''

David Baxby and Patrick McCall, two directors of Virgin Blue's board, voted with chief executive Godfrey against the dividend payment, Branson said in a separate statement.

War of Words

``We are disappointed at the way this was dealt with at the boardroom level,'' Branson said.

Patrick Corp. responded by calling Branson's statement a ``whopping great board confidentiality breach,'' designed to be a ``self-interested trumpet call on behalf of the Toll bid,'' according to an e-mail to Bloomberg today.

Virgin Blue's shares rose for the third day, gaining 9 percent to a seven-month high of A$1.82 at the market close in Sydney. Patrick Corp.'s shares rose 1.3 percent to A$7.16 while Toll's shares rose 1.5 percent to A$13.70.