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Virgin Australia: home based bidders might have the advantage

Virgin Australia: home based bidders might have the advantage

I have previously posted about the bidders circling Virgin Australia. The deadline for the initial bids to take on Virgin Australia, currently in voluntary administration closed at 6pm this evening.

A reported 9 bids were received. Two were by Australian based bidders:

  • Tattarang – Twiggy Forest’s vehicle, which signed a confidentiality agreement (CA) preventing it from meeting with stakeholders
  • BGH Capital, teamed with Australian Super, did not sign, and so, had no such constraints. It had access to the Virgin data room before Virgin went into administration, and the harsh confidentiality agreement was imposed

The rest of the bidders included:

  • Brookfield Private Equity – reportedly with the support of involved unions
  • Bain Capital
  • Oaktree
  • Apollo
  • Platinum Group
  • Indigo Partners
  • InterGlobe Enterprises – owners of an Indian low cost airline

The two Australia based bidders may have an advantage, as their takeover would probably not be subject to FIRB (Foreign Investment Review Board) approval.

Vaughan Strawbridge of Deloitte’s, the administrator is expected to release outlines of the bids on Monday. He is also insisting that parties entering the shortlisting process will have to sign the CA.

Final bids are due by June 12

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The Administrator has previously said he’s aiming at a short list of 3 bids, so there is a lot to whittle down from. He will also have to juggle the needs of creditors, unions, the Virgin brand, and government interests, including Queensland’s investment vehicle QIC, and the federal government. The FIRB adds a further complication to the juggling.

Lets hope Mr Strawbridge has the requisite circus skills for all this juggling. If he doesn’t, the outcome is far from certain – as I have said before. We could be looking at Ansett all over again.

I’m trying to stay more positive, as I think it would be best for the aviation industry in Australia if Virgin does survive, but with Rex talking about entering domestic operations – who knows what the outcome will be.

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