Virgin Australia: Bond holders get shirty

If you thought all was smooth sailing until the creditors meeting in late July to wrap up the sale of Virgin Australia to Bain Capital and end the task of the administrators, Deloitte, then you would be wrong.

Virgin bondholders

The Bondholders represented by Broad Peak Investment are seeking access to the sale agreement between the Virgin administrator (Deloitte) and the new owner, Bain Capital.

No one is giving away what the sale details are – least of all Deloitte and Bain Capital. For the bondholders, knowing what they will get out of the sale as unsecured creditors, is just a little bit important.

Previously

The bondholder group, including Broad Peak, have previously put forward (outside the bid process) a proposal to swap their AU$2 billion in debt for the ownership of Virgin, along with another nearly AU$1 billion sweeteners to help Virgin on its way and to retain the companies listing on the Australian Stock Exchange.

Deloitte said ‘thanks but no-thanks’ on that idea.

Earlier in the week on Monday, it was revealed that some bondholders had applied to the Takeovers Panel to poke their nose around the deal, arguing that Deloitte has mishandled the administration of Virgin Australia, mainly because they blocked the bondholders deal being presented to Virgin creditors.

What the bondholders are after

They want to know how much they will get under the administrator’s preferred deal with Bain Capital that is going to be presented at the creditors meeting. Rumour has it that they may be looking at less than 10¢ in the AU$, so you can see why they are prepared to manoeuvre to get anything more than that.

2PAXfly Takeout

The aviation industry has a difficult road ahead when it comes to sustainability. It’s going to require a relative revolution in technology, with ‘electric planes’ or hydrogen planes, or some form of jet engine that doesn’t require a carbon based fuel. And that is going to require the development of an alternative to jet engines probably.

It’s a big ask. It will take time to develop.

This move to home grown and manufactured SAF is a first step – maybe even a baby step in a very long road of innovation. In the long run, US$200 million won’t even touch the sides.

I think this is just part of the usual rough and tumble of private equity and hard-done-by unsecured creditor bondholder life. Mind you, it would be interesting to know what the price for Virgin Australia is going to be. Not necessarily in the public’s interest, just mine.