Virgin Australia to be sold to Bain Capital

clipped_wings

Established Member
Joined
Feb 7, 2016
Posts
1,158
There's a ironic ending to a movie I once saw, where the final shot pans out from the main characters till they are too tiny to see. The scene continues to retract and the wide angle gets progressively further and further away - until finally the Earth and it's galaxy are specks of Matter, being played as pawns in a galactic game at the far reaches of some universe by Supreme Beings, who are far more advanced and empowered than those tiny mortals.

I can't help but feel there is a sad parallel with the sale of Virgin Australia and it's 9000 employees. Or the sale of any Company for that matter.
 

Carrots

Active Member
Joined
Jul 18, 2013
Posts
541
Qantas
Gold
Virgin
Platinum
Interesting (of sorts) common sense summary article by Mr McCrann of the unsecured bondholder action...

Long story short and copy paste of the bi-line really summarises it well.

"The Federal Court has dealt with Virgin bondholders in a process that was swift and clean, sensible, decisive, effective and exactly correct"


Terry McCrann: Real court does the right thing to keep Virgin alive
 

RAM

Established Member
Joined
Jan 30, 2011
Posts
3,309
Interesting (of sorts) common sense summary article by Mr McCrann of the unsecured bondholder action...

Long story short and copy paste of the bi-line really summarises it well.

"The Federal Court has dealt with Virgin bondholders in a process that was swift and clean, sensible, decisive, effective and exactly correct"


Terry McCrann: Real court does the right thing to keep Virgin alive
Case in point - here's Terry McCrann mislabelling the unsecured bondholders.

Unusual for someone who is normally very careful with details.
 

Melburnian1

Enthusiast
Joined
Jun 7, 2013
Posts
22,659
This article (of which part is below) appeared on 'The Australian' site at about 1800 hours on Monday 21 July 2020:

'Virgin’s [unsecured] bond holders have submitted a draft deed of company arrangement to its administrators on Monday, outlining a $3bn recapitalisation program for the airline in a bid to step up the pressure for their proposal to be taken seriously.

The draft proposal is aimed at allowing the representatives of some $2 billion in unsecured creditors to begin talks directly with unions representing some 9000 Virgin staff and other creditors including banks and aircraft lessors ahead of presenting an unconditional formal offer at the next creditors meeting on August 26.

Their debt for equity proposal is aimed at challenging a deal by the administrator, Deloitte’s Vaughan Strawbridge, and private equity fund Bain Capital to buy the airline signed on June 26. That deal is to be considered at a creditors’ meeting at the end of August.

A spokesman for the [unsecured] bondholders said on Monday that the group “firmly believed” that their proposal represented the best option for Virgin Australia, its employees, creditors, stakeholders and the Australian community...

...“We are seeking to work cooperatively and constructively with the administrator and believe that Deloitte is well placed to assist with access to stakeholders and information ahead of the second creditors’ meeting in August to enable the deed of company arrangement (DOCA) to be finalised,” the spokesman said.

The debt for equity proposal put forward by the [unsecured] bond holders includes a proposed upfront $125 million cash injection and a debt for equity swap which would see Virgin’s $2bn in unsecured creditors end up with shares in an ASX listed Virgin...'

Further down it says:

'...The debt for equity proposal put forward by the [unsecured] bond holders includes a proposed upfront $125 million cash injection and a debt for equity swap which would see Virgin’s $2bn in unsecured creditors end up with shares in an ASX listed Virgin.

The [unsecured] bond holders, which include some 5500 “mum and dad” small investors and retirees, many of them in Queensland, as well as some 30 larger investors, are worried that they could end up receiving next to nothing for their investments from the Bain proposal.

Virgin’s administrator, Deloitte’s Vaughan Strawbridge, has already formally rejected the proposal by the [unsecured] bond holders, in favour of a binding offer by private equity fund Bain Capital.

But Strawbridge will now need to make a decision on how to handle the draft proposed deed.

Bain Capital is due to make its formal deed of company arrangement proposal on August 12. That proposal should include how much it proposes to give to the [unsecured] bond holders.

But the [unsecured] bond holders are not set to learn how much they will lose until they are given a formal report by the administrators, which is scheduled to be delivered on August 19, ahead of their meeting on August 26...'

--------------

Note the changed date for the creditors' meeting: not 21 or 22 August, but 26 August 2020 which is a Wednesday. I don't know why it has been altered. (I am not a creditor).
 
Sponsored Post

Struggling to use your Frequent Flyer Points?

Award Flight Assist takes the hard work out of finding award availability and redeeming your frequent flyer or credit card points for flights.

Using their expert knowledge and specialised tools, the Award Flight Assist team at Frequent Flyer Solutions will help you book a great trip that maximises the value for your points.

drron

Veteran Member
Joined
Jul 4, 2002
Posts
30,366
Well lot's of details of how they save the unsecured creditors - themselves.but no real detail on the secured creditors.So they may get the vote by numbers but doubtful by value.
Therefore the Administrator gets the casting vote.Don't think they will vote for the note holders.
 

jakeseven7

Enthusiast
Joined
Sep 9, 2005
Posts
10,252
VIRGIN’S ADMINISTRATOR WON’T ACCEPT BONDHOLDER BID

Virgin Australia’s administrator has told creditors it won’t be accepting a rival bid from bondholders – despite a Federal Court judge insisting the group can put their alternative proposal to a vote.

Deloitte made the declaration in a letter, which also confirmed that ‘winning’ bidder Bain has already pumped $125 million into the loss making business just to keep it trading.



 

MooTime

Established Member
Joined
Mar 1, 2019
Posts
1,273
Qantas
Gold
Virgin
Platinum
VIRGIN’S ADMINISTRATOR WON’T ACCEPT BONDHOLDER BID

Virgin Australia’s administrator has told creditors it won’t be accepting a rival bid from bondholders – despite a Federal Court judge insisting the group can put their alternative proposal to a vote.

Deloitte made the declaration in a letter, which also confirmed that ‘winning’ bidder Bain has already pumped $125 million into the loss making business just to keep it trading.



WOW, the story thickens...with a month still before creditors meeting, how much more can unfold.

I'm sure the Bondholders won't just lie down & back off & with Federal Court sort of on their side in terms of their bid to receive the credence they expect. Interesting move by Deloitte.
 

Carrots

Active Member
Joined
Jul 18, 2013
Posts
541
Qantas
Gold
Virgin
Platinum
AS @oz_mark mentioned, important to note the date of the letter being pre updated/formal proposal from the Unsecured Bondholders.

For me these few paragraphs from the AA article really say it all:

It confirmed that, on 24 June, the business received what it called a “back-up recapitalisation proposal” from [Unsecured] bondholders, represented by Broad Peak Investment Advisers and Tor Investment Management.

However, it said it was unable to accept “any alternative offer for the sale” because Bain is committed to buying the business.

In a line seemingly related to the [Unsecured] bondholders’ bid, Strawbridge said, “An additional proposal to that from Bain Capital and Cyrus Capital was received, which we considered.

“However, it was highly conditional and contained no evidence of committed funding to enable a transaction to be completed. In these circumstances, we were unable to take this proposal forward given the lack of certainty and the level of conditionality.”


At the end of the day, the only way these unsecured bondholders have any chance of being successful is to out bid Bain, which you would think is highly unlikely. Their court action really was around trying to copy the other kids homework so to speak so they could get a leg up, and rightfully so the court declined.

So the $X Billion question is... how much do they need to trump Bain, and will they find it. Answer: Unlikely.
 
Last edited by a moderator:

HS-TQE

Established Member
Joined
Apr 5, 2018
Posts
1,137
Qantas
Gold
Virgin
Gold
Unless in the (extremely unlikely) case of Temasek actually stepping in directly (taking over from Broad Peak), the chances of the "half-coughd" Bondholders/Broad Peak 'bid' is pretty much little to none.

Temasek should probably follow their "golden child" SQ (SQ has a similar track record to Etihad's failed investments) in staying well away from VAH. Temasek's involvement in Australia at the most should be kept to a minimum through SQ re-negiotating their codeshare/FF partnership with VA once the dust settles.
 

Matt_01

Established Member
Joined
Mar 12, 2016
Posts
4,025
I am just wondering if there is a public record of the affidavit that the administrators submitted to the courts around conditional credits and the court's decision. I have googled this and cannot find an exact document but can find pages and pages of other affidavits and court submitted documents. Any links would be appreciated.
 

oz_mark

Enthusiast
Joined
Jun 30, 2002
Posts
20,011
I am just wondering if there is a public record of the affidavit that the administrators submitted to the courts around conditional credits and the court's decision. I have googled this and cannot find an exact document but can find pages and pages of other affidavits and court submitted documents. Any links would be appreciated.

Anything here?

Or
 

Matt_01

Established Member
Joined
Mar 12, 2016
Posts
4,025
Anything here?

Or
Thanks, it looks like I may have to continue trawling through these as well. I do not understand the legal jargon, I am just looking for something that courts said conditional credits are approved as this is contrary to VA guest compensation policy. I think I am fighting an uphill battle with AMEX.

Edit, by dumb luck I stumbled across what I was looking for based on order dates to when things were published in the media. For anyone else interest this is the link to conditional credits
 
Last edited:
Joined
Feb 9, 2014
Posts
5,251
Hopefully, after Aug this year, if Bain makes it through to the final stage of the buy, I hope they will put out something for the members of VFF laying out what their plans are for the program.
a.How it will change, what they need us to know
b.How it will stay the same, what they need us to know
etc, etc, etc.
If they want to "noble" off VFF, then let us know.
If they want to take away comfort seat booking, let us know.
Waiting with baited breath.
 

jakeseven7

Enthusiast
Joined
Sep 9, 2005
Posts
10,252
Hopefully, after Aug this year, if Bain makes it through to the final stage of the buy, I hope they will put out something for the members of VFF laying out what their plans are for the program.
a.How it will change, what they need us to know
b.How it will stay the same, what they need us to know
etc, etc, etc.
If they want to "noble" off VFF, then let us know.
If they want to take away comfort seat booking, let us know.
Waiting with baited breath.

I hope the same....but I suspect they are going to keep a lot of plans hidden (because a lot won’t be popular) until the last minute and then just unleash them on people with minimal notice.

Also the airlines are still barely flying because of the ongoing border closures and I suspect Bain did not believe we would still be in this position now... so they are probably going to have to rework their plans and $$ injections big time as well... maybe delaying any massive changes until later down the track....

There is also I suspect an impending full QLD border closure with NSW which is going to chop VA1/2 off at the knees again (well all airlines)
 
Last edited:

Enhance your AFF viewing experience!

From just $6 we'll remove all advertisements so that you can enjoy a cleaner and uninterupted viewing experience.

And you'll be supporting us so that we can continue to provide this valuable resource :)


Sample AFF with no advertisements? More..
Top