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Is Virgin Australia sold! It looks like it may not be!

August 14, 2020 Headline News 1 Comment Email Email

With the administrator of Virgin Australia, Deloitte’s Vaughan Strawbridge and Bain Capital recently announcing that the airline had been sold to Bain Capital, it may be that they may have rather jumped the gun!

Why?

Because this week, the founders of what was then Virgin Blue, which became Virgin Australia, and some of the former management team, have backed the original bondholders of Virgin Australia in a bid against Bain Capital and also filing documents with the Federal Court on Tuesday.

The impressive Founders and Bondholders team is led by Virgin Blue joint founders Rob Sherrard and Bruce Highfield and includes former Chief Financial Officer Manny Gill, General Manager of Network Operations Andrew Lillyman and General Manager of Public Affairs Heather Jeffery, with no doubt whatsoever in their in depth knowledge of aviation, having run Virgin Blue and Virgin Australia very successfully indeed for many years.

As administrator, Deloitte has to demonstrate that it is fulfilling its legal obligations as administrator in securing the best possible deal for creditors and bondholders, who it appears will recover very little if anything from the Bain deal.

Deloitte has already rejected two offers from the bondholders with significant bondholders Broad Peak Investment Advisors and Tor Investments having now filed documents in the Federal Court on Tuesday, seeking orders to enable them to obtain crucial information and access to stakeholders, which they claim have been denied to them so far.

They say that the information withheld is required so that they can finalise their alternative proposal and a deed of company arrangement [DOCA] to be put to employees and creditors in time for voting at the second meeting of creditors of Virgin Australia that is currently scheduled for the 4th of September, which is when the Bain deal, until today was expected to have been accepted and become finalised.

Interestingly though, any deal will need to be approved by 50% of creditors by value and 50% by number to be finalised, with it appears the Bain deal might now be in jeopardy

So, who are the Bondholders?

Well, they are around 6,000 ‘Mum and Dad’ retail note-holders and more than 30 institutions who have collectively invested $2 billion in Virgin Australia over the past six years, who stand to lose all their investment, but are also willing to reinvest in the company, with thirteen institutions, including several large global banks and asset managers, as well as a large number of retail bondholders, having already indicated their support for the Bondholders’ proposal.

Rob Sherrard said, “Put very simply, we are proud investors and supporters of Virgin Australia and its people and we believe in the airline, firmly supporting the vision of the management and are confident that Virgin can return to being a successful airline”.

He added, “Under our plan, Virgin Australia would remain a majority Australian owned public company, listed on the ASX as opposed to only being an asset of a privately-owned investment company based in the USA and we firmly believe our Founders and Bondholders’ proposal will result in the best return for all creditors and employees”.

“Let me be clear in that that we don’t want to run the airline, as that is the job of the existing management team, but we are focused on rebuilding what we describe as our airline through a solid recapitalisation proposal”.

In addition, with Bain having already announced significant numbers of Virgin Australia being laid off, Sherrard added, “We are very keen to speak with employees and engage with the employee unions on the details of our proposal as soon as possible, but currently under the terms of the Virgin Australia Administration, we have not been able to do so”.

Written by : John Alwyn-Jones

Currently there is "1 comment" on this Article:

  1. Mark says:

    Where to next? eGlobal thanks for the updates and kindly keep your finger on the trigger for more news regarding this. Occasionally the bean-counters loose track of the longer view when under time constraints and pressure to find a way forward.

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