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Blindsided Bain hit back at Virgin bondholders with staff promise

written by Adam Thorn | June 24, 2020
Boeing 737-8FE VH-VOT
A Virgin Australia Boeing 737-8FE, VH-VOT, flying in better times.

Bain Capital, one of the two remaining official bidders for Virgin Australia, has reacted to news the airline’s bondholders have launched an 11th-hour bid by making a series of new public promises to staff.

Mike Murphy, a managing director of Bain Capital, said in a statement the group would protect as many jobs at Virgin Australia “as possible” and create a “broad-based employee equity participation program”.

The move is significant because, earlier, the Australian Council of Trade Unions president Michele O’Neil called on Bain to make these very assurances public.

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The support of staff is vital to the deal as employees together account for 9,020 of the total number of creditors and are owed $451 million.

The statement, released at 12:03pm on Wednesday from Mike Murphy, said Bain would:

1. Cover all employee entitlements;
2. Protect as many jobs at Virgin Australia as possible;
3. Implement a support program for employees impacted by COVID; and
4. Develop a broad based employee equity participation program.

The TWU, the biggest union, has yet to take sides in the competition between Bain and Cyrus, but has called the bondholders move “unsettling”.

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Bain’s statement to Australian Aviation and other media outlets came hours after Virgin’s bondholder broke cover with their 11th-hour bid, and is a sign of the rapidly shifting powerbase in the battle to secure control of the airline.

Sydney advisory Faraday Associates lodged the proposal with administrator Deloitte at 7am on Wednesday, which will involve offering $800 million to recapitalise the business and $125 million to keep it alive during the administration process.

Faraday Associates, which is representing bondholders, said in a statement, “Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline.

“This approach offers the fastest pathway to return Virgin to the new operating environment for Australian aviation and positions the airline to resume high-quality services to its millions of loyal Australian customers.”

The move was sparked by fears that, should Bain or Cyrus win, unsecured bondholders would be wiped out.

Deloitte is due to pick the winning bidder next week and put that proposal to creditors later in August.

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4 Comments

  • Paul

    says:

    The bondholders throwing a spanner in the works. Good to see they are justified in their efforts. The unions are naturally upset. Waiting to see how this plays out.

  • The arrogance of Strawbridge to think that the Virgin bondholders would just sit back and take a slaughter is at best unprofessional and naive. Rather than wasting time on union agitators a mature Administrator would have spent this time on the powerful bondholders who were never going to just walk away and lose their $2billion+ or up to 90% of it.
    The Deloitte reputation in the administration area will have taken a heavy hit over the way VA has been handled.
    When it comes to the Creditors Meeting the money not the creditor numbers will talk. If the bondholders were to lose wait for the court cases and whilst this is going on VA will have to be liquidated all because Strawbridge was more interested in the game and fees than the result.
    Best the unions just shut up so they don’t alienate the new shareholders any further.
    I would back the cashed up well connected bondholders who would give the airline proper funding and the management mature, sage guidance.

  • T Wong

    says:

    The ACTU needs and wants is only for their members’ interest. Never mind the mums and dads money invested into the company as they don’t matter. What a bunch of selfish people. In my opinion the Bondholder’s bid should be honoured. The union members will still be paid anyway.

  • Tarquin

    says:

    Yes, Neil, the handling of Vol Admin by first-timer Strawbridge, & Deloitte’s, has been abysmal to say the least.
    At a minimum, fancy allowing a union in on negotiations by a private Administrator, for a private company.

    Even though the circumstances were vastly different, I remember well the excellent handling of AN collapse by KordaMentha.
    Obviously, Virgin couldn’t afford the best, so, as the old saying goes ‘you gets what you pay for’.

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Blindsided Bain hit back at Virgin bondholders with staff promise

written by Adam Thorn | June 24, 2020
Boeing 737-8FE VH-VOT
A Virgin Australia Boeing 737-8FE, VH-VOT, flying in better times.

Bain Capital, one of the two remaining official bidders for Virgin Australia, has reacted to news the airline’s bondholders have launched an 11th-hour bid by making a series of new public promises to staff.

Mike Murphy, a managing director of Bain Capital, said in a statement the group would protect as many jobs at Virgin Australia “as possible” and create a “broad-based employee equity participation program”.

The move is significant because, earlier, the Australian Council of Trade Unions president Michele O’Neil called on Bain to make these very assurances public.

Advertisement
Advertisement

The support of staff is vital to the deal as employees together account for 9,020 of the total number of creditors and are owed $451 million.

The statement, released at 12:03pm on Wednesday from Mike Murphy, said Bain would:

1. Cover all employee entitlements;
2. Protect as many jobs at Virgin Australia as possible;
3. Implement a support program for employees impacted by COVID; and
4. Develop a broad based employee equity participation program.

The TWU, the biggest union, has yet to take sides in the competition between Bain and Cyrus, but has called the bondholders move “unsettling”.

PROMOTED CONTENT

Bain’s statement to Australian Aviation and other media outlets came hours after Virgin’s bondholder broke cover with their 11th-hour bid, and is a sign of the rapidly shifting powerbase in the battle to secure control of the airline.

Sydney advisory Faraday Associates lodged the proposal with administrator Deloitte at 7am on Wednesday, which will involve offering $800 million to recapitalise the business and $125 million to keep it alive during the administration process.

Faraday Associates, which is representing bondholders, said in a statement, “Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline.

“This approach offers the fastest pathway to return Virgin to the new operating environment for Australian aviation and positions the airline to resume high-quality services to its millions of loyal Australian customers.”

The move was sparked by fears that, should Bain or Cyrus win, unsecured bondholders would be wiped out.

Deloitte is due to pick the winning bidder next week and put that proposal to creditors later in August.

25% off starts now! Australian Aviation magazine Cyber Monday sale is now live. Have the very best of Australian Aviation’s annual print and digital subscription. This includes every In Focus and Behind the Lens digital magazine, special coverage, exclusive photos and editions you may have miss. Subscribe now at australianaviation.com.au.

4 Comments

  • Paul

    says:

    The bondholders throwing a spanner in the works. Good to see they are justified in their efforts. The unions are naturally upset. Waiting to see how this plays out.

  • The arrogance of Strawbridge to think that the Virgin bondholders would just sit back and take a slaughter is at best unprofessional and naive. Rather than wasting time on union agitators a mature Administrator would have spent this time on the powerful bondholders who were never going to just walk away and lose their $2billion+ or up to 90% of it.
    The Deloitte reputation in the administration area will have taken a heavy hit over the way VA has been handled.
    When it comes to the Creditors Meeting the money not the creditor numbers will talk. If the bondholders were to lose wait for the court cases and whilst this is going on VA will have to be liquidated all because Strawbridge was more interested in the game and fees than the result.
    Best the unions just shut up so they don’t alienate the new shareholders any further.
    I would back the cashed up well connected bondholders who would give the airline proper funding and the management mature, sage guidance.

  • T Wong

    says:

    The ACTU needs and wants is only for their members’ interest. Never mind the mums and dads money invested into the company as they don’t matter. What a bunch of selfish people. In my opinion the Bondholder’s bid should be honoured. The union members will still be paid anyway.

  • Tarquin

    says:

    Yes, Neil, the handling of Vol Admin by first-timer Strawbridge, & Deloitte’s, has been abysmal to say the least.
    At a minimum, fancy allowing a union in on negotiations by a private Administrator, for a private company.

    Even though the circumstances were vastly different, I remember well the excellent handling of AN collapse by KordaMentha.
    Obviously, Virgin couldn’t afford the best, so, as the old saying goes ‘you gets what you pay for’.

Leave a Comment to Neil M Hansford Cancel

Your email address will not be published. Required fields are marked *

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