Virgin Australia Financially Secure? [Now in Voluntary Administration]

[melb78]

Cyrus prob has a good bet as it wants to stay as a full service carrier but not sure what Brookfield wants to do with VA but the unions seem to want Brookfield

 

[jakeseven7]

Cyrus prob has a good bet as it wants to stay as a full service carrier but not sure what Brookfield wants to do with VA but the unions seem to want Brookfield

Brookfield though seem to be touting lots of jobs to go and a much smaller airline so surprising if the unions are siding with that....

I suppose more to be revealed shortly...!

 

[PPS_SYD]

Looks like we may have to wait a little longer for the final 2. Better late than sorry i guess.

 

[jase05]

Brookfield though seem to be touting lots of jobs to go and a much smaller airline so surprising if the unions are siding with that....

I suppose more to be revealed shortly...!

Seems Brookfield have made some of their plans known

Brookfield plans $500m Virgin boost

Canadian infrastructure giant Brookfield Asset Management is proposing to inject more than 500m of upfront cash into Virgin Australia to recapitalise the airline and fully provide for staff redundancies as a key element of a 40-page rescue proposal lodged with its administrator on Friday.

amp.theaustralian.com.au

 

[jakeseven7]

Seems Brookfield have made some of their plans known

Brookfield plans $500m Virgin boost

Canadian infrastructure giant Brookfield Asset Management is proposing to inject more than 500m of upfront cash into Virgin Australia to recapitalise the airline and fully provide for staff redundancies as a key element of a 40-page rescue proposal lodged with its administrator on Friday.

amp.theaustralian.com.au

At least they have committed to covering the cost of the redundancies. I’m not sure whether to be pleased or worried about their down scaling plans.... it’s probably very prudent but means destination / frequency cuts that would make VA2 a much smaller player....

Devil will be in the detail as it actually unfolds I suppose.

At the moment it’s just pitch / bid documents where the suitors will promise anything to win the keys! So how much do you really believe....?

 

[RooFlyer]

I'm starting to rethink my 'guess'. Brookfield returning, and more information has caused this!

Given that Brookfield have been excluded from the bid process for the past 2+ weeks - no access to management interviews, creditors, the hard-core data available to the second round bidders,# I'd be interested in how they can put up a binding bid at all. Sure, they may have access to some past management, but it a really big call ...

# There must have been much better info in the second round, else the second bids would be the same as the first!

EDIT: I see they want the timeline changes. Big issues there - the other bidders 'followed the rules' and now this lot get let back into the tent, and want the process to change to accommodate them? Lawyers at 10 paces coming up.

 

[p--and--t]

At least they have committed to covering the cost of the redundancies. I’m not sure whether to be pleased or worried about their down scaling plans.... it’s probably very prudent but means destination / frequency cuts that would make VA2 a much smaller player....

Devil will be in the detail as it actually unfolds I suppose.

At the moment it’s just pitch / bid documents where the suitors will promise anything to win the keys! So how much do you really believe....?

Don't mind if its smaller - as long as the staff leaving get what they are owed, a significant proportion of staff get to keep their jobs, the new operation is profitable for the long term/sustainable and provides a capable competitor / choice.

 

[jakeseven7]

Virgin’s administrator has confirmed he intends to whittle bidders down from four to two by “early next week” after a second deadline passed on Friday afternoon.

It comes as both The Sydney Morning Herald and The Australian Financial Review report that Brookfield Asset Management has re-entered the race after withdrawing earlier on.

The final four interested parties are private equity firm BGH Capital, US aviation company Indigo Partners, New York investors Cyrus Capital Partners, and Boston investment company Bain Capital.

Virgin bidders down to two in days, says administrator

It comes as newspapers report that Brookfield Asset Management has re-entered the race after withdrawing earlier on.

australianaviation.com.au

 

[RooFlyer]

It comes as both The Sydney Morning Herald and The Australian Financial Review report that Brookfield Asset Management has re-entered the race after withdrawing earlier on.

They can only "enter the race" if the Administrator allows them. Any word on this? Although i understand that they may be able to put a parallel proposal to the creditor meeting, separate from the Administrator. Sort of like staging your own 100m race outside the Olympic Stadium and claiming the gold medal if you had the fastest time. Whether they get to stand on the podium is a different question!

if you were one of the final 2, and found yourself competing with a third who just plonked themselves down at the table, late, what would you do? Unlikely to just go along passively, I think.

Or if you were one of the excluded two in the last round, and the Administrator let some-one else in, whose proposal hadn't been weight against yours, again, would you just accept that?

Interesting times.

 

[melb78]

Tuesday we all should kn ow who the final 2 will be I am hoping one of them will be Cyrus

 

[burmans]

They can only "enter the race" if the Administrator allows them. Any word on this? Although i understand that they may be able to put a parallel proposal to the creditor meeting, separate from the Administrator. Sort of like staging your own 100m race outside the Olympic Stadium and claiming the gold medal if you had the fastest time. Whether they get to stand on the podium is a different question!

if you were one of the final 2, and found yourself competing with a third who just plonked themselves down at the table, late, what would you do? Unlikely to just go along passively, I think.

Or if you were one of the excluded two in the last round, and the Administrator let some-one else in, whose proposal hadn't been weight against yours, again, would you just accept that?

Interesting times.

Not sure if fairness comes into this, pretty sure the administrator will have written the terms so they the right to amend the terms of the selection as it suits, and if a new entrant has a compelling proposition I can't see how they would be acting in the best interests of the creditors if they were to ignore it.

 

[muppet]

They can only "enter the race" if the Administrator allows them. ....

I see where you're coming from but given the administrator has a very clear and specific role that is legislated, I can't see how an offer that is put to them can be ignored.

 

[RooFlyer]

Not sure if fairness comes into this, pretty sure the administrator will have written the terms so they the right to amend the terms of the selection as it suits, and if a new entrant has a compelling proposition I can't see how they would be acting in the best interests of the creditors if they were to ignore it.

I see where you're coming from but given the administrator has a very clear and specific role that is legislated, I can't see how an offer that is put to them can be ignored.

I agree - the Administrators want the best field possible and they may well have been a clause in the process that says "The Administrator reserves the right to do pretty much as they please ...". But it would be really bad faith if they let anyone rock up at any time. Unless it was really explicity stated up front from the start ... which isn't impossible I guess. Doing due diligence and putting a bid in is a really expensive thing. Lawyers, accountants, experts, technicals ... all the best available working horrible (billable) hours.

Maybe :

So I go to all that trouble and expense, and someone who hasn't been exposed to all the information asks for more time so they can splash a big bid and I get turfed? I want my entry ticket money refunded, please.

Now, Mr Deloittes, at the end of the day you might have that right, but lets test it in court, shall we? What does that do to your time-table, Mr Deloitte? Ooops, all those people just lost their jobs as a result of your playing silly bug*ers. Not great for your name, Mr Deloittes.

and/or

Hang on, Mr Deloitte you excluded us, in round 1, and now you've let these guys in. WE now want the right to put an amended bid in ... and hold the process please, like you are doing for Brookfield. Oh, my mates are also thinking about splashing billions ... and we let everyone know ... so now you'll have to wait for them, right?
_______

Having been involved in a few corporate / big asset sale processes, a fair while ago now, I can't remember if there were clauses saying the process could be trashed at the auctioneer's whim, but its not something you would do lightly. Especially, in an Administration, the Administrator is personally liable in many respects.

 

[moa999]

Hard to make an offer if you're not in the tent though with so many variables.

Depending on what the various offers are creditors may well get a vote (eg. Lessors may prefer an offer that retains the 777/330 leases)

 

[Melburnian1]

Don't mind if its smaller - as long as the staff leaving get what they are owed, a significant proportion of staff get to keep their jobs, the new operation is profitable for the long term/sustainable and provides a capable competitor / choice.

Huge amount of optimism. I can only see liquidation, but goodness knows when. Maybe in August 2020.

 

[oz_mark]

Given that Brookfield have been excluded from the bid process for the past 2+ weeks - no access to management interviews, creditors, the hard-core data available to the second round bidders,# I'd be interested in how they can put up a binding bid at all. Sure, they may have access to some past management, but it a really big call

well, they managed to do a presentation, so they must have had some access...

 

[RooFlyer]

well, they managed to do a presentation, so they must have had some access...

I don't think the second bit necessarily follows the first one, but as I'm not in the tent, I wouldn't know ...

Such a presentation may have started with, and relied heavily on the word "Assuming ...."

 

[antycbr]

Huge amount of optimism. I can only see liquidation, but goodness knows when. Maybe in August 2020.

Melburnian1 with the greatest respect you post this on an almost daily basis.

According to the SMH this morning bids are in the 4-5 billion dollar range.

It seems reasonably certain that some form of VA will emerge from this process.

 

[HappyFlyerFamily]

Melburnian1 with the greatest respect you post this on an almost daily basis.

According to the SMH this morning bids are in the 4-5 billion dollar range.

It seems reasonably certain that some form of VA will emerge from this process.

So only 2-3 billion dollars of debt to be forgiven? and if Brookfield’s purported offer is any guide Secured creditors and employees paid almost in full and the unsecured creditors get/share the remainder.

 

[antycbr]

So only 2-3 billion dollars of debt to be forgiven? and if Brookfield’s purported offer is any guide Secured creditors and employees paid almost in full and the unsecured creditors get/share the remainder.

Yep, that seems to be the plan, unsecured creditors can try to veto the whole thing but they'd be brave thinking they'd get more in liquidation, particularly with global aviation so depressed. VA continuing would offer them more cents in the dollar in the current environment.

The other consideration is the employee entitlements issue only becomes a problem in liquidation or when employees are made redundant. Continuing employees would take leave at normal rates rather than those liabilities all falling due at once.