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Virgin bondholders still trying to stop VA sale

New offer could be a move to align Virgin Australia with Star Alliance

Bondholders plan to present a deed of company arrangement (DOCA) for Virgin Australia at the next creditors meeting in August, in spite of a sale agreement between VA administrator Deloitte and US equity firm Bain Capital



According to the Sydney Morning Herald, a Federal Court hearing that sought to give bondholders access to documents relating to the sale, confirmed that the alternative offer would be put forward at the next meeting. 


The move aims to effectively resurrect the airline group and stop its sale.


The announcement of the Bain deal looked to have buried a plan by investment advisors Broad Peak and Hong Kong’s Tor Investments to exchange the $2 billion in debts owed to bondholders for ownership of Virgin. 


But aggrieved bondholders have stood firm.


RMIT University School of Management Senior Lecturer Warren Staples says the new proposed alternative seeks equity for bondholders. 


“This may be viewed as a last-minute attempt to try and get more dollars out of the sale but it's far more likely to be about maintaining or rebuilding an alliance with the new Virgin Australia operation,” said Staples, whose research and teaching focuses on corporate governance and social responsibility, and business and government relations.


“Broad Peak are linked to Temasek, the Singaporean sovereign wealth fund, who are the major shareholders in Singapore Airlines.”


"This move demonstrates how keen Temasek and Singapore Airlines are to have Virgin Australia as part of the Star Alliance, and as a source of customers for Singapore Airlines."


Deloitte has not disclosed how much Bain Capital will pay creditors, who are owed $6.8 billion, for Virgin Australia. Nor has it revealed how many of Virgin’s 9,000-strong workforce will lose their jobs.


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Written by: Mark Harada
Published: 13 July 2020

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