Wednesday, 26 September 2007

Virgin Mobile Flotation

In Virgin Mobile (USA) set up in November 2003 is planning to raise $375 million (£186 million) in new funds for its upcoming float on Wall Street. The company, which is a joint venture between Sprint Nextel (US telecoms giant) and the Virgin group, both hold a 47% share in the business. The group moved into the black for the first time during the first quarter of the year, with 15% of the American market (4.88 million) mobile users. In the float the group will sell a stake worth almost 43%.

In the latest filing to the SEC last night, the company said that it planned to sell about 27 million shares at between $15 and $17 each. After expenses, the company plans to use the $375 million to repay $150 million of debt and $45 million of borrowings that it owes to Sprint. If the float goes ahead at $16 a share, it would value the group at more than $900 million. Virgin, which uses the Sprint PCS network to offer pay-as-you-go wireless communications services targeted at the youth market, hit a million customers within 18 months of its launch. As of June 30, Virgin served about 4.8 million customers. The company’s revenue and net income for the six months ended June 30 were about $666.9 million and $26.5 million, respectively.

Mer-rill Lynch, Lehman Brothers and Bear Stearns, the US investment banks, the underwriters for the flotation, have the option to buy up to an additional 4.1 million shares to cover any overallotments made by the flotation.

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