The administrators for Virgin Australia have provided creditors with an update on the airline’s sale process, including the likely date for the much-anticipated second meeting.
In a circular to creditors, joint administrator Vaughan Strawbridge said that while his team at Deloitte have already agreed to the sale of Virgin to Bain Capital, the private equity firm is still obliged to submit a Deed of Company Arrangement (DOCA) proposal on 12 August 2020.
If approved by creditors at the second meeting, Strawbridge said the DOCA proposal will provide a better return to unsecured creditors than if the sale is completed through the asset sale transaction.
Details of the transaction, the DOCA, the return to creditors, and the administrators’ recommendation to creditors will be included in Deloitte’s report to creditors, which is expected to be issued on 19 August.
The likely date for the second meeting of creditors has been pencilled in for 26 August.
Strawbridge also used the update to defend the administrators’ decision to reject a last-minute proposal by Virgin’s bondholders, saying the surprise bid was “highly conditional and contained no evidence of committed funding to enable a transaction to be completed”.
“In these circumstances, we were unable to take this proposal forward given the lack of certainty and the level of conditionality,” he said.
However, despite their offer being rejected, bondholders from Broad Peak Investment Advisors and Tor Investment Management are still able to table an alternative DOCA proposal to creditors, with the Federal Court ruling last week that they are well within their right to make a play for the beleaguered airline.
Strawbridge noted that Bain provided an initial $125 million funding injection on 1 July so Virgin could continue to trade until the sale process has been completed.
Furthermore, Strawbridge said that he and his team of administrators are currently in the process of working with Virgin’s management team and Bain to restructure the business for future operations.
The restructuring process is expected to be “significantly progressed but not finalised prior to the second meeting of creditors”, according to Strawbridge.
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