The battle to control Virgin Australia appears to be over after its bondholders said they will now not table a rival offer at a final creditors meeting.
Victorious bidder Bain Capital responded to the announcement by claiming the investors representing the rebels, Broad Peak Investment Advisers and Tor Investment Management, earlier hinted they would abandon their offer in exchange for a more favourable return to the near $800 million owed.
Bain beat out Cyrus Capital Partners in May to become the administrator’s preferred bidder for the airline, yet bondholders fought on to recoup more of their investment. However, their fight all-but ended last week when a Federal Court judge ruled administrator Deloitte didn’t have to put the alternative bid to a shareholder vote.
The bondholders said in a statement that while their offer represented a “superior outcome for all stakeholders”, they were “left with no choice” but to pull out after the court’s ruling.
The investors then hinted at potential further legal action should they not be offered a satisfactory return. “We reserve our rights to take whatever action is necessary to protect our interests as creditors,” said a spokesperson.
Bain hit back in a fiery statement claiming the bondholders’ proposal was “incomplete” and alleging it was secretly angling for a side deal.
A spokesperson told Australian Aviation, “[The withdrawal] is not unexpected, as they had previously suggested behind closed doors that they were willing to abandon their disruptive efforts in exchange for a much smaller recovery than the asserted value of their proposal, that would apply just for themselves. Bain Capital believes that all creditors should be treated fairly and similarly situated creditors should be treated equally.
“Bain Capital firmly believes that its binding sale agreement reached with the administrators after an intensively competitive process is in the best interests of all creditors.”
Broad Peak and Tor responded to the accusation by telling The Australian its goal had always been to secure the best deal for its members.
“We look forward to Bain Capital disclosing the terms of its secret deal with the administrator and would encourage the information to be released at the earliest opportunity to remove uncertainty for all stakeholders,” they said.
In total, bondholders as a whole are owed $1,988 million altogether and have previously been told they will not receive the full amount. In total, 10,247 creditors, including 9,020 employees, are owed around $7 billion.
In the Federal Court last Tuesday, the bondholders’ barrister, Ian Jackman, said his clients were entitled to have their proposal, or Deed of Company Arrangement, voted for at the next creditors meeting on September.
However, Judge John Middleton threw out the appeal. There was speculation the group could challenge the decision, but that appears to have finally ended today.
Bain will still require their offer to be rubber-stamped by investors at the meeting in early September, and that will also likely require backing from the business’ employees, who represent 9,020 of the total number of creditors and are owed $451 million in total.
Significantly, it has previously reported how relations between TWU and Bain appear to have strained.
Australian Aviation understands there is anger over the rumoured involvement of former Jetstar chief executive Jane Hrdlicka, who had a notoriously fraught relationship with unions in her role at the Qantas Group.
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