Virgin Australia creditors have voted to approve the proposed sale to Bain Capital at a virtual meeting.
Under the Deeds of Company Arrangement (DOCA) recommended by Virgin’s administrators, Virgin employees and secured creditors will receive 100% of their owed entitlements.
Unsecured bondholders, meanwhile, will only receive approximately 9-13 cents per dollar owed. But the administrator believed that was still a better outcome than the alternative of liquidation, which would likely see them receiving nothing. If the airline was to liquidate, Bain Capital would have likely received the company’s assets and the airline would have been shut down. Fortunately, this outcome was averted.
According to the Sydney Morning Herald, Richard Branson and Transport Workers Union members voted in favour of the sale to Bain Capital, as did various other union groups.
Bain Capital now has 15 days to sign the DOCAs. The process of transferring ownership of Virgin Australia to Bain Capital is expected to be finalised by the end of October. Administrators will retain control of the company until then. Virgin Australia has been in voluntary administration since 21 April 2020.
Once the sale is finalised, US private equity firm Bain Capital will be the 100% owner of Virgin Australia. The airline’s previous shareholders, which included Singapore Airlines, Etihad Airways, HNA Group, Nanshan Group, Virgin Group and ASX shareholders, will receive “no consideration”.
The sale is good news for Virgin’s remaining employees and customers, as it secures the mid-term future of the airline. Bain Capital plans to turn Virgin Australia into a “value carrier”, focusing on domestic and short-haul international flying with an all-737 mainline fleet.
“This outcome provides certainty for employees and customers, a return to creditors, opportunities for suppliers and financiers to continue to trade with the Virgin Australia Group as well as maintaining a competitive Australian aviation industry for the benefit of consumers,” joint voluntary administrator Vaughan Strawbridge said.
“While the outcome of the meeting today is a significant milestone for both the future of Virgin Australia and Australia’s aviation industry more broadly, we also acknowledge those loyal Virgin Australia Group employees who will lose their jobs and the difficulties that this will cause them and their families as well as the numerous suppliers and investors who will not receive all of the monies owed to them,” Strawbridge said.
Virgin customers with outstanding travel credits will have these converted to “future flight” credits, which will come with some restrictions, later this month.
Join the discussion on the Australian Frequent Flyer forum: Virgin Australia to be sold to Bain Capital