The ‘winning’ bidder for Virgin Australia, Bain Capital, has said a rival proposal put forward by bondholders is “incomplete” and “not credible”.
The group added in a statement that the offer submitted by Broad Peak Investment Advisers and Tor Investment Management was actually designed to “frustrate the administration process by creating as much noise and interference as possible”.
Bain beat out Cyrus Capital Partners in May to become the preferred bidder for the airline, yet bondholders have vowed to fight on and put a rival bid forward so they can recoup more of their $2 billion investment.
Last week, The Australian reported that the bondholders submitted a deed of company arrangement to Virgin’s administrator Deloitte, which included a seat on the board for an employee representative.
In a response released on Tuesday, Bain said, “Stakeholders need certainty and stability, so for the sake of the airline and its employees, Bain Capital will not be distracted by it. They do not speak for all bondholders.
“These hedge funds are offshore and specialise in high risk and high yield debt trading. They are not set up to own or provide stewardship for such a significant company such as Virgin Australia.
“They have no aviation or direct airline ownership experience together. Neither has an office in Australia.”
Even though Bain has pumped $125 million into the business to keep it trading, the deal won’t be rubber-stamped until a creditors meeting later in August.
The Federal Court has already confirmed the bondholders have the right to put forward their alternative plan for a vote.
Bain’s putdown comes after Deloitte itself similarly criticised the bondholders’ bid, which it said was “highly conditional and contained no evidence of committed funding”.
“In these circumstances, we were unable to take this proposal forward given the lack of certainty and the level of conditionality,” added Deloitte.
The bondholders have made their move because they are owed $1,988 million and have been told they will not receive the full amount. In total, 10,247 creditors, including 9,020 employees, are owed around $7 billion.
Those groups will find out exactly how much money they will receive from Bain’s proposal on 19 August 2020, before the second creditors meeting and vote to rubber-stamp the deal on 26 August.