Virgin Australia: Bondholder told ‘NO’ to accessing sale documents

Two of the Virgin Australia bondholders, who fear they might only get around AU10¢ in the dollar in the sale of the airline to Bain Capital, have been denied their applications to access the sale and implementation deed.

Broad Peak Investment Advisors and Tor Investment Management had their motion thrown out of the Federal Court by Justice John Middleton after a one hour hearing on Friday (10 June) morning.

The Singaporean (Broad Peak) and Hong Kong (Tor) based bondholders took the action in the hope that it would support their alternative re-capitalisation proposal, which would have given them ownership of Virgin Australia. The decision means that proposal is pretty much dead in the water.

Alternative proposal

The decision may still not deter the bondholders from putting forward an alternate deed-of-arrangement for the VA creditors meeting in August. We shall see.

Let me look at your proposal before I write mine

Effectively, this sub-group of bondholders holds about AU$300 million in Virgin bonds. Their request to see the proposal agreed with Bain and the Deloitte administrators, is like them saying, ‘we can only present our offer once we see the endorsed offer’. Given this whole bidding process has been held on a competitive basis, they never had much of a chance winning this round. Deloitte argued that it was ‘unorthodox and highly prejudicial to provide them with confidential material‘ and would jeopardise the future of Virgin Australia.

Their last chance will be with the application they made, also on Monday, to the Takeover Panel which determines disputes about corporate acquisitions. The Panel has not even decided whether they will take on the dispute, and this Federal Court decision is probably not going to help.

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.

Nothing to see here. Move on.

Just part of the jockeying for position in the corporate world. Given that there are millions, billions even at stake here, these lawyerly moves are to be expected. There’s still a few weeks before August, so this may not be the last proposal to be hit to the side before the sale agreement heads off to the Virgin Australia creditors meeting.