Home » News » Virgin update: Suitor made move 18 months ago, administrators seek help and Velocity joins creditor list

29 April, 2020

Virgin update: Suitor made move 18 months ago, administrators seek help and Velocity joins creditor list

Adelaide, Australia - December 23, 2015: Virgin Australia Airlines Boeing 737-8FE VH-VOS taking off from Adelaide International Airport.

As the administrators and creditors of Virgin Australia prime themselves for tomorrow’s meeting, there’s been a juicy mix of revelations and updates in the days leading up to it.

Perhaps the most interesting development of late is a mainstream media report that one of the Virgin’s suitors made a play for the airline just 18 months ago.

According to The Sydney Morning Herald, US private equity firm Indigo Partners agreed to purchase a 20 per cent stake in Virgin from Chinese financial services conglomerate HNA in late 2018.

The media outlet’s sources say Indigo went even further by approaching two other stakeholders – Nanshan and Etihad Airways – to see if they too wanted to sell their 20 per cent slices in the Virgin pie.

But, as you probably would have already figured out, neither investor was keen to part ways with their stake, and Indigo wasn’t happy with just 20 per cent, so the deal was called off.

However, this latest revelation surely places the Arizona-based private equity firm – which counts airlines such as Frontier Airlines in the US and Wizz Air in Europe among its investments – as a serious challenger to Aussie player BGH Capital.

Another company to watch as Virgin’s administration process plays out is Singapore’s state-owned investment fund, Temasek, which is indirectly linked to the carrier through its backing of Singapore Airlines (a 20 per cent shareholder in Virgin Australia).

Temasek has partnered with BGH in the past and has previously stated that it was keen to invest in companies with the Aussie firm.

The SMH’s sources claim that while both parties have talked about the prospect of bidding for Virgin, there’s been nothing set in stone about joining forces.

Meanwhile, The Australian Financial Review has reported Virgin’s administrator, Deloitte, is set to appoint investment banking giant Morgan Stanley to help its other adviser, Houlihan Lokey, with the company’s sale.

Recent speculation that Deloitte might be forced to step aside from the administration process due to its previous dealings with Virgin has been hosed down by the unions, much to the disappointment of KordaMentha.

However, the firm may still play an important role in Virgin’s future, with The Australian reporting that KordaMentha may end up representing the airline’s bondholders, who are owed roughly $2 billion.

Finally, Velocity Rewards, which controls Virgin’s Velocity Frequent Flyer program, has joined the cue as a creditor in the hope of clawing back a $150 million loan it gave the airline back in 2014, according to the AFR.

Furthermore, Velocity Rewards will also look to recoup $10 million in pre-purchased seats from Virgin, which were saved for frequent flyer members.

Featured image credit: iStock/Ryan Fletcher

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