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Virgin Australia to be sold to Bain Capital

travel_bug

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eastwest101

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So Cyrus tried to sweeten their offer after the deadline ? (ET quote above from Cyrus statement)

Then its not surprising Deloitte didnt reply.

Gamesmanship..

Well to be fair to Cyrus, if Deloitte gave any indication that they would consider the 11th Hour Bondholders bid, then the inference could be made that Deloitte may not be following their own rules and conditions in the process, and if thats the case, why not lob in a better/sweeter offer? As you say - gamesmanship abounds. Very short term thinking producing a suboptimal outcome for everyone.

Probably also an excellent example of why you never ever have a shortlist process that excludes bidders, and especially a process that narrows it down to 2 short listed bidders, because it only takes something to go wrong with one bidder, or malfeasance of one bidder, and you have lost all your competitive tension...... thats a stupid way to get the best deal possible for creditors/vendors/owners.

Why didn't Deloitte just run an open data room, give a simple timeline with a hard deadline then have period of no shop no talk, accept and clarify all bids (ignore any bids after the deadline) and then produce a list, then go through the list until the creditors find something acceptable to them? Any departure from a transparent process is just asking for a legal challenge from any unsuccesul bidders, and you dont want to start the process all over again because of an administrative bungle.
 
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Melburnian1

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...This hands a lot of power to Bain to go a lot harder than they pitched to reshape the business and take it more no frills - which is what they wanted to do before the unions started going at them at them in the media.
Irrespective as to how 'hard they go', it won't be profitable.

Liquidation will be the result in the end.
 
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antycbr

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Well to be fair to Cyrus, if Deloitte gave any indication that they would consider the 11th Hour Bondholders bid, then that says to me that Deloitte may not be following their own rules and conditions in the process, and if thats the case, why not lob in a better/sweeter offer? As you say - gamesmanship abounds. Very short term thinking producing a suboptimal outcome for everyone.

Probably also an excellent example of why you never ever have a shortlist process that excludes bidders, and especially a process that narrows it down to 2 short listed bidders, because it only takes something to go wrong with one bidder, or malfeasance of one bidder, and you have lost all your competitive tension...... thats a stupid way to get the best deal possible for creditors/vendors/owners.

Why didn't Deloitte just run an open data room, give a simple timeline with a hard deadline then have period of no shop no talk, accept and clarify all bids (ignore any bids after the deadline) and then produce a list, then go through the list until the creditors find something acceptable to them? Any departure from a transparent process is just asking for a legal challenge from any unsuccesul bidders, and you dont want to start the process all over again because of an administrative bungle.
I don't recall anything that indicates that Deloitte were facilitating the entry of the bondholders. The bondholders had to force their entry to the dataroom.

The challenge is to have a field of tyre kickers in the dataroom isn't straightforward. Firstly some of them may be fronts for your competitors (Rex, QF, even NZ) and secondly the process is already tight, organising meetings with the VA management/exec team to the level required would have stretched the process out.
 

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Irrespective as to how 'hard they go', it won't be profitable.

Liquidation will be the result in the end.
Was wondering how long it would take for our good friend Melburnian1 to raise this prospect. He's been banging on about it for the last 3,000 posts.

Bain have signed a deed and intend to proceed with the transaction at this point. They've had numerous points where they could have broken out of the process but have chosen not to. Bain has other investments in Australia and they'd lose their reputation moving forward if they pull out now. The bids are binding.

I personally think VA has more chance of success under Bain with the radical surgery proposed. Cyrus would have not been the "tough love" that VA needs to succeed.

Evidence across the fence is that QF need to, and are, undertaking the same radical surgery. Every airline worldwide unless funded by petrodollars or state pride needs to do the same.
 

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3AW news says that Cyrus received an email receipt acknowledging bid submission, but that Deloitte hasn’t taken a phone call since!
The ABC article suggests the announced withdrawal is at least partly attention seeking:
I think Deloitte has stuffed it up big time if they it is true that they have not returned phone calls or emails to Cyrus but has kept engaged with Bain Ove the last few days then Deloitte should have a good kick up the butt. plus they should bring out a statement asap.
I've run tenders where the rules required acknowledging a tender submission but no further communication could be entered into (for probity reasons) except at specific documented intervals.
Re the last quote above - exactly. So Cyrus submitted a final, binding bid and then didn't get any feedback. This is exactly what I would have expected to have been done (maybe Deloitte could have said 'Sorry, but we can't engage more until the bid is assessed' - but maybe they did e-mail something like that). Its like handing in an exam paper and then expecting to discuss it with the teacher before it has been marked.

You put in a final, binding offer. Final and binding. The Administrator will have taken at least a few days to assess it, and the other one. The offer should have contained all the information the Administrator needed to assess the bid. But THEN Cyrus put in an amended bid a few days later!! I mean, WTF?

My take is that Cyrus realised that they weren't in the box seat and so withdrew the offer so as not to lose. I don't know how you can withdraw a final, binding offer', but there you go.

EDIT: From the statement by Cyrus:

On the morning of 22 June 2020, Cyrus presented to the Administrators of Virgin Australia Holdings an offer to acquire the airline, its regional business and the frequent flyer program Velocity, in accordance with the Administrators’ procedures. However, since then, the Administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer.

On the morning of 25 June 2020, Cyrus submitted a further unsolicited package of value improvements and other compelling measures to increase the value of the transaction, improve the return to unsecured bondholders and deliver more certainty for the Administrators. This too received no response other than an acknowledgment of receipt.

Despite the material improvements put forward, the Administrators have still not engaged with Cyrus on its offer.
All pretty unprofessional, IMHO.
 

serfty

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Just because they have deep pockets doesn't mean they will use it ....
In response I quote an excerpt from @antycbr's post.
Bain have signed a deed and intend to proceed with the transaction at this point. They've had numerous points where they could have broken out of the process but have chosen not to. Bain has other investments in Australia and they'd lose their reputation moving forward if they pull out now. The bids are binding.
 

jakeseven7

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I personally think VA has more chance of success under Bain with the radical surgery proposed. Cyrus would have not been the "tough love" that VA needs to succeed.
Totally agree, the Bain razor gang are sorely needed and VA2 will be stronger for it. I think that was the running consensus of those reading into it as well per the media reports, leaks and discussion on this board.

I selfishly hope that Bain don't go toooo down market though.
 

Melburnian1

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...Bain have signed a deed and intend to proceed with the transaction at this point. They've had numerous points where they could have broken out of the process but have chosen not to. Bain has other investments in Australia and they'd lose their reputation moving forward if they pull out now...
I've never suggested that a successful bidder would 'pull out' (after signing to take it on).

What I have focused on is how others will derail the process.

Anyone who thinks today is the end of the matter is misinformed. The creditors' meeting isn't until 21 August 2020.
 

jakeseven7

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So Virgin name will probably remain, but not confirmed.
Future of PS is a maybe, with Jayne lurking in the background!

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MORE DETAILS EMERGE AS BAIN WINS VIRGIN BY DEFAULT


The formal announcement came at 11am after its only official rival, Cyrus Capital Partners, dramatically withdrew its proposal early on Friday morning.

Bain’s winning bid will now be put to creditors in August, who will vote to confirm the deal. It’s still unknown whether the bondholders will attempt to wrestle back control after launching a coup earlier this week.

Bain also appeared to hint it would retain the Virgin branding, by repeatedly referring to “Virgin Australia” in its correspondents to Australian Aviation.

Administrator Vaughan Strawbridge said the deal “supports the current management team led by Scurrah and their improvement plan for the airline”, suggesting the current top team may remain in place.

Full story
 

HS-TQE

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A news article yesturday from Singapore reported that VA's bondholders have ran to a firm owned by 'Temasek Holdings' to do/negotiate the infamous repetitive "Singapore to taek ovah VA !!!!111!" deal..

 
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