(qlmbusinessnews.com via news.sky.com– Fri, 24th Apr 2020) London, Uk – –
Virgin Group and Brait are providing a £20m loan to help steer Virgin Active through the coronavirus pandemic, Sky News learns.
Sky News has learnt that Virgin Group and Brait, a South African investor which owns a majority stake in Virgin Active, have injected £20m in new loans into the gym chain to shore up its finances.
The injection has emerged days after Virgin Australia was forced into voluntary administration, and as Sir Richard seeks a £500m rescue deal to keep Virgin Atlantic aloft.Coronavirus UK tracker: How many cases are in your area – updated daily
Earlier this week, the billionaire tycoon said he was seeking to raise capital from his Necker Island home to plough back into his portfolio of companies.
Sources said on Friday that Sir Richard and Brait were providing the £20m loan to Virgin Active on a pro rata basis, meaning Virgin's direct contribution is just £4m by virtue of its 20% equity stake.
However, they added that Virgin Enterprises Limited, the UK-based entity which manages Virgin's brand licensing activities, had also agreed to defer royalty fees owed by the fitness chain that are understood to be more than £10m a year.
Virgin Active operates 43 clubs in the UK, employing just under 3,000 staff.
Virtually all of them are furloughed under the government's Coronavirus Job Retention Scheme, with Virgin Active topping up employees' salaries to ensure that they are on full pay during the lockdown.
The company also trades in seven other countries, including Australia, Italy and Singapore.
Last month, Sir Richard said he was investing $250m into various Virgin-branded companies around the world, with roughly half of that said to have been injected into Virgin Atlantic.
The airline has asked ministers for a £500m bailout in the form of a commercial loan and guarantees against money being held back by credit card companies.
It is also in the preliminary stages of talks with a range of potential private investors into the company, although EU airline ownership requirements will place limitations on the nature of those investors.
Peter Norris, the chairman of Virgin Group, recently urged Boris Johnson to establish an industry-wide bailout strategy worth up to £7.5bn.
That request appears to have been dashed by Rishi Sunak, the chancellor, who has signalled that only “bespoke” aid will be available “as a last resort”.
In an open letter to staff at Virgin-branded companies this week, Sir Richard said he was “working day and night to look after our people and protect as many jobs as possible”.
“We are operating in many of the hardest hit sectors, including aviation, leisure, hotels and cruises, and we have more than 70,000 people in 35 countries working in Virgin companies,” he said.
“We're doing all we can to keep those businesses afloat and I am so thankful to all of you who have continued to work so hard in these difficult times. We have already committed a quarter of a billion dollars to help our businesses and protect jobs, and will continue to invest all we can.”UK lockdown rules explained
Sir Richard insisted that he had not based himself in Necker for tax reasons, and said: “As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the group.”
In total, VEL has agreed to defer tens of millions of pounds in fees owed by the hardest-hit Virgin-branded companies as the coronavirus pandemic decimates revenues across his leisure and travel operations.
Those talks also involve Virgin Cruises and Virgin Holidays, which will now not be required to hand over fees they pay to VEL for use of the Virgin brand until next year at the earliest.
Companies in Sir Richard's portfolio which have been relatively unaffected by the crisis include Virgin Media, the pay-TV broadcaster and mobile phone network operator.
His group's paper value has been dented, though, by the sharp fall in the value of Virgin Money during the last 12 months, with banks suffering from rock-bottom interest rates.
Virgin Group typically owns minority stakes in companies which use the brand, although Virgin Atlantic is an exception, with the billionaire continuing to control its equity.
Virgin Active and Virgin Group both declined to comment.
By Mark Kleinman