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Battle for Virgin back on as bondholders confirm new bid

written by Adam Thorn | July 10, 2020
Virgin Australia operates ATR 72-600 from Sydney to a number of regional destinations in NSW. (Seth Jaworski)
A Virgin Australia ATR 72-600, which operates to a number of regional destinations in NSW. (Seth Jaworski)

The battle to gain control of Virgin Australia is back on after bondholders confirmed they will put their alternative proposal to creditors in August.

The revelation came despite the group losing a Federal Court case on Friday morning to obtain access to secret details of Bain’s ‘winning’ bid approved by administrator Deloitte.

Bain beat off Cyrus Capital Partners last month to become the preferred bidder for the airline, with a final vote going to creditors in August to rubber-stamp the deal.

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Days later it emerged that creditors, including bondholders owed $2.1 billion, were unlikely to be repaid in full while shareholders wouldn’t receive a cent from the deal.

On Friday morning the bondholders, represented by Broad Peak Investment Advisers and Tor Investment Management, went to the Federal Court to try and gain access to confidential documents regarding the Bain ‘deal’ so they could launch a counter offer – but judge John Middleton knocked back the request.

However, despite the ruling, the judge urged Deloitte to consider sharing more information voluntarily.

“The administrators may have to make some rather hard decisions about how much they do disclose information for the purposes of the second creditors’ meeting,” Justice Middleton said.

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“If they take a particular approach the second creditors’ meeting may become litigious.

“I’m just … warning is putting too fine a point on it I may say.”

He added it was also in “everyone’s interest” for there to be communication between the administrator and creditors.

The bondholders’ counsel, Ian Jackman, then indicated the group would still table a rival offer in August, saying, “My clients seek to bring an alternative DOCA [deed of company arrangement] at the creditors’ meeting. We have a right to do that.”

Today’s court action was the latest move in a long saga that began when Virgin Australia’s bondholders broke cover and launched an attempt to wrestle control of the airline days before Bain won.

The bid was linked with Virgin Blue co-founder Rob Sherrard, who famously wrote up the initial concept of the low-cost carrier with Brett Godfrey on the back of a beer mat in a London pub.

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4 Comments

  • Rod Pickin

    says:

    We should all be encouraged by Mr. Justice MIddleton’s remarks in this case. Today all we seem to get from the courts is Law whilst the repercussions for the plaintiffs is often untold misery. The Administrators may well have acted in a technically perfect manner here but there is always a human side to consider, in this case many thousands of lives adversely affected by their actions. For every action, there is a re-action as the judge quite clearly has indicated. It aint over yet.

  • Paul

    says:

    Whilst the judge is very clear, all that will happen is a delay to finalising the sale. A good delay tactic by the bondholders but so far all we have heard is a lot of noise and no substance to their alternative proposal.

  • Nicholas

    says:

    Come on now,

    One purpose and one alone. Frighten the administrators into paying bond holders.

    No vision or detail at all on a post administration Virgin.

    The law should send them packing. Only a fool would have touched those bonds.

  • Anton

    says:

    If the Bain Deal is unsuccessful in August then Virgin will be liquidated and that will signal the end of Australia’s second largest airline as we all know it!

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