BOOM! Virgin’s bondholders crash the bidding party with $3 billion proposal

BOOM! Virgin’s bondholders crash the bidding party with $3 billion proposal
By Travel Weekly


You could sense that something was brewing amongst Virgin Australia’s bondholders, and now it’s been confirmed that they are making a late play for the airline.

While the two remaining bidders – Bain Capital and Cyrus Capital Partners – locked in their offers on Tuesday afternoon, Virgin’s administrators woke to an alternative proposal being lobbed at them early Wednesday morning.

The $3 billion package consists of the bondholders injecting $800 million of new capital into the struggling carrier, as well as providing $125 million worth of interim funding, and having their $2 billion in debt converted into equity in a reborn Virgin Australia.

A spokesperson for the airline’s bondholders – which include thousands of retail investors – confirmed to Travel Weekly that the “comprehensive recapitalisation proposal” had been submitted to the administrators by Faraday Associates.

“Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline,” the spokesperson said.

“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.”

With the administrators from Deloitte hoping to put forward their preferred bidder to creditors by Tuesday, this last-ditch effort from Virgin’s bondholders certainly makes for an interesting next few days. Whether we get a decision by then is anyone’s guess.

Deloitte declined to comment when contacted by Travel Weekly.

Which way do you think Virgin’s administrators will go? Join Travel Weekly’s Travel Trade Life Raft Facebook group and vote now in our poll.

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