Virgin Blinked

19 July 2004 By Bill McIntosh

It has also cut the number of shares being offered. The proceeds tumble from £230m to £130m. It is telling that the flotation is still attractive to Sir Richard Branson, despite the massive cut.

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Virgin Mobile has slashed the midprice of its proposed flotation by 19% to 210p in a new 200p220p range. That replaces the earlier midprice of 260p in the initial 235p285p range.

The company has also cut the proportion of equity being offered to 25%. That will see 63m shares being sold compared to the earlier plan to sell 98m.

Prior to any overallotment, the proceeds from selling equity will be £130m at the new midprice compared with £230m in the first pricing. That will value the company at £520m, enough for it to join the FTSE 250 Index of midrange stocks.

Virgin Mobile will have debt of £311m. That will see Virgin Group, which will continue to own 75% of the mobile operator, receive a net special payment of £190m, taking total proceeds from the float to £320m.

Combing debt and equity will give Virgin Mobile an enterprise value of £831m.

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