Virgin bidders down to two in days, says administrator

written by Adam Thorn | May 29, 2020
Boeing 737-8FE VH-VOT
A Virgin Australia Boeing 737-8FE, VH-VOT, flying in better times.

Virgin’s administrator has confirmed he intends to whittle bidders down from four to two by “early next week” after a second deadline passed on Friday afternoon.

It comes as both The Sydney Morning Herald and The Australian Financial Review report that Brookfield Asset Management has re-entered the race after withdrawing earlier on.

The final four interested parties are private equity firm BGH Capital, US aviation company Indigo Partners, New York investors Cyrus Capital Partners, and Boston investment company Bain Capital.

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The state of Queensland, which earlier confirmed its interest, has still yet to show its hand ahead of the final mid-June deadline.

On Friday afternoon Deloitte’s lead administrator, Vaughan Strawbridge, said his team has held nearly 100 meetings with bidders, unions, governments and stakeholder groups since the last deadline two weeks ago.

He said all four were “well-funded parties” with “significant aviation experience”.

“The competitive tension that has resulted from the process conducted to date confirms that all the parties have a genuine interest in the future of Virgin Australia, and see real value in the business, despite the uncertainty about when travel restrictions will be lifted,” said Strawbridge.

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“There is some speculation out there around what dollar value bidders might be placing on the business. This is just speculation, and we won’t know what that value might be until binding offers are required in mid-June.

“This next phase, which will include further engagement with stakeholders and aircraft financiers as they seek agreements on future terms ahead of binding bids being received, will be just as intense and defined by an ongoing focus to deliver the best possible commercial outcome for creditors, and see Virgin Australia restructured and out of administration as a strong and sustainable airline.”

Earlier, two newspapers reported that former entrant Brookfield had re-entered the race, something that the SMH speculated could lead to legal action from the four finalists. “It would just be ridiculous,” the source said.

Australian Aviation previously reported that the TWU met with the government’s Virgin representative, Nicholas Moore, and told him this week that attempts to sell the business are being impeded by lack of clarity over whether or not there will be federal help.

Unions representing the airline’s employees – who together account for 9,020 of the total number of creditors and are owed $451 million – told the media later that a lack of reassurance means serious bidders are “trying to crunch numbers in the dark”.

National secretary Michael Kaine added afterwards that interested parties “don’t know when the airline might be able to get back in the air because of state and federal restrictions and they don’t know if there will be any financial assistance. This means it is almost impossible to put together a plan for Virgin”.

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15 Comments

  • Rod Pickin

    says:

    Good evening and welcome aboard Deloittes flight 001 to Virginvillage which tonight is under the command of Capt. Vaughan Strawbridge. For this flight he is assisted by a fine group of management Captains and I have to say that I hope he doesn’t run out of nose up trim considering the weight of the bars and stars up there in the flight deck. The en route weather forecast is for fine and clear conditions but no doubt some slight turbulence about the ranges. This sector is not too long, quite comfortable in fact but the destination TAFOR indicates some turbulence which makes the landing a Capt. only task. There are a few high pressure systems in the area plus a few low pressure systems dissipating but some likely to increase in intensity and make our descent and landing quite interesting. The task tonight is to act in the best interests of Australia, not one individual or company so with that in mind we hope you enjoy your flight and we hope to see you onboard at another time, thank you for flying Deloittes.

  • Jack Chomley

    says:

    Would it be fair to say brown bags could form part of the money exchanged in the final deal?
    I would hope not, but we are dealing with human beings after all?

  • Paul

    says:

    The Qld Govt alleged bid was all about politics.

    • Kim

      says:

      With First Officer Cameron Dick at the controls for an aborted take-off!

  • James

    says:

    What’s a TAFOR?

  • W Tainton

    says:

    Hasn’t Capt Strawbridge been appointed by the company and therefore Australia’s best interests are not part of the briefing.

    • Rod Pickin

      says:

      Yep Warwick I happen to agree with you but I live in hope. My understanding of “Administration” omits flexibility and consideration of logical varying parameters and regrettably I feel we will steer to the old financial conclusion only. In my opinion it is not in our countries best interests to replace the existing with just a LCC carrier, sure there has to be some change but finely considered and measured; – unfortunately I am not allowed to say the name, but of all the players there is only one bidder consortium we should consider. That does not in any way downgrade the quality and expertise of the other bidders making representations. Our industry needs specific skills and heaps of experience gained from a direct involvement within it; it is not a tradeable commodity as we know it on various stock exchanges. I would expect that the P.M. and the Minister identify a clear policy decision as to how we should progress in this matter. I am not saying they should get directly involved we just need another Scomo road map. Cheers

      • weightANDbalance

        says:

        Adminstrators I think technically are supposed to look to the interests of the *creditors*, so, yeah, just an ‘old financial conclusion’ as it were.

        There are a ton of experienced aviation people at Virgin who will be likely lost to the industry, depending on what happens.

  • Guglielmo

    says:

    Considering the mount of capital available in country I don’t see any proposal for at least 51% Ozzie ownership. Therefore I figure the business case just doesn’t stack up.

  • TD

    says:

    It seems that relaunching VA is just to refund the creditors and not for the long term good. It also seems that Australian content has been eliminated so a “who cares” attitude is in place for a quick short term burst of revival.
    Surely we can keep VA owned by and for Australians along similar lines or better than QA.

  • Steve

    says:

    Wonder if the QLD government have Aldi bags full of cash for a last minute bid??

    • TD

      says:

      Have to Jack about that……

  • Meepa

    says:

    Bloody Hell, why buy VA? Just start your own Indigo! 50 A320 NEO’s and grab ALL the Tigerair crews that were sacked. Save yourself MILLIONS!!

  • Linda Weaving

    says:

    Well, no benefits in it for Aus after all. Investment corporations are only interested in in chopping up, selling off bits, milking as much out of it as they can, then selling it as a shadow of its former self.

  • Neil

    says:

    Looks like we are headed for a reduced sized airline folks!an,all Boeing 737-800 fleet!

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