Virgin Australia Financially Secure? [Now in Voluntary Administration]

[jakeseven7]

Well they finally folded.

July 10 and QLD is open for business which will only help a VA2 launch and perhaps breathe a little bit more air into the VA1 sales as well.

What a relief.

Just this morning, while you might think Qld is slow there is a reason.

Protester and toddler at childcare centre among eight new coronavirus infections in Victoria

Chief Health Officer Brett Sutton says the man in his 30s was unlikely to have acquired the virus at the Black Lives Matter demonstration, but was potentially infectious on Saturday.

www.abc.net.au

 

[BNEFlyer]

Well they finally folded.

July 10 and QLD is open for business which will only help a VA2 launch and perhaps breathe a little bit more air into the VA1 sales as well.

What a relief.

It's not official until the end of the month, but it seems to be almost guaranteed.

 

[Melburnian1]

It's not official until the end of the month, but it seems to be almost guaranteed.

Given what's occurring in Melbourne, there may be a little reluctance to admit individuals from that state, but difficult or impossible to police, as the NSW/Vic border was not closed at any stage.

 

[RAM]

Yet another VA 'The Australian' article, this time (again) re the bondholders:


'Representatives of Virgin’s unsecured bond and note holders, who are owed around $2bn, have been allowed to access the airline’s data room by administrator Deloitte’s Vaughan Strawbridge in a move which could potentially give them greater negotiating power over the airline’s future.
The Australian understands the group, represented by advisory firm Faraday, has been invited by Mr Strawbridge to have access to sensitive commercial information about Virgin which would give it more context to assess the nature of the bids offered by short-listed parties, Bain Capital and New York hedge fund Cyrus.

It would also give it more negotiating power to propose other options, including a potential recapitalisation of the airline which could see the note and bond holders continue to remain as creditors for the life of their current bonds, some extending out to 2024, rather than losing most of their money now, and having to do a deal when Virgin is at a low point.

Faraday represents the biggest group of unsecured creditors, ranging from more than 5000 “mum-and-dad” retail investors to about 30 major institutional bond holders.

The unsecured bond holders, some of whom invested in a $325m note raising launched by Virgin last November, are worried they could lose almost all their money in the current negotiations unless they can take a more proactive stance in negotiations.

Some Virgin notes are now trading at around 15-20c in the dollar..'.

This administrator is really giving Administrators a bad name....

Unsecured means exactly that - they lent their money with NO security or guarantee of getting it repaid other than in the normal course of business. That's why they got offered an interest rate (coupon) approx 5x times what they'd get from a Term deposit.

The business has gone into administration so legally they've lost their money if a buyer offers less than every other preferrential debtor is owed (which normally never happens). About the 47th Australian company to go to administration with substantial unsecured debts since 1989 looking at my (not-extensive) list. Amount they got back averaged per company (not amount outstanding) about 2 cents per dollar face value, in NPV terms around 0.4 cents. Most were zero. Most went from administration to liquidation which saw the administrators/liquidators' total fees mulitples what the unsecured creditors ever got.

Has there been any information about whether another part of the ex-Chinese Walls Administrator's company had worked for VA in the past?

The bit of spin about why they let them in does not impress. All this would appear to do is guarantee this process goes on MUCH longer which coincidentally may see significant additional earnings for the Administrator.

 

[jakeseven7]

Given what's occurring in Melbourne, there may be a little reluctance to admit individuals from that state, but difficult or impossible to police, as the NSW/Vic border was not closed at any stage.

Nope she won't back down now - this has been decided for over a week, they've been dripping it out from the Sunday news.

She has an election and with tourism workers out of a job and the industry kneecapped - its happening July 10, for all.

 

[Melburnian1]

This administrator is really giving Administrators a bad name....

Unsecured means exactly that - they lent their money with NO security or guarantee of getting it repaid other than in the normal course of business. That's why they got offered an interest rate (coupon) approx 5x times what they'd get from a Term deposit....

Has there been any information about whether another part of the ex-Chinese Walls Administrator's company had worked for VA in the past?

The bit of spin about why they let them in does not impress. All this would appear to do is guarantee this process goes on MUCH longer which coincidentally may see significant additional earnings for the Administrator.

RAM, I am always reluctant to reply to oracles such as you,, but to answer your question, 'yes.'

In 'SMH'/'The Age' of 23 April 2020, there was a relevant article. Here is a portion (I cannot 'link' it as one moderator on AFF keeps informing us that to show AFFers the whole article may breach copyright laws).

'...In a report that all administrators are required to file after being appointed, known as a Declaration of Independence, Relevant Relationships and Indemnities (DIRRI), Deloitte said it had advised Virgin on taxation, human resources and earlier restructuring projects.

The report said Deloitte partner Richard Hughes has been advising the group on corporate simplification since 2018 until now. “Richard Hughes was appointed by Virgin to conduct various Members Voluntary Liquidations for the purpose of deregistering solvent, non-operating entities within Virgin’s corporate structure.

“The appointments were for five dormant and two active, non-operating, entities in June 2018, and two dormant entities in March 2019, the declaration said...'

 

[RAM]

RAM, I am always reluctant to reply to oracles such as you,, but to answer your question, 'yes.'

In 'SMH'/'The Age' of 23 April 2020, there was a relevant article. Here is a portion (I cannot 'link' it as one moderator on AFF keeps informing us that to show AFFers the whole article may breach copyright laws).

'...In a report that all administrators are required to file after being appointed, known as a Declaration of Independence, Relevant Relationships and Indemnities (DIRRI), Deloitte said it had advised Virgin on taxation, human resources and earlier restructuring projects.

The report said Deloitte partner Richard Hughes has been advising the group on corporate simplification since 2018 until now. “Richard Hughes was appointed by Virgin to conduct various Members Voluntary Liquidations for the purpose of deregistering solvent, non-operating entities within Virgin’s corporate structure.

“The appointments were for five dormant and two active, non-operating, entities in June 2018, and two dormant entities in March 2019, the declaration said...'

Thank you! Very interesting indeed.

 

[clarkkent]

I cannot 'link' it as one moderator on AFF keeps informing us that to show AFFers the whole article may breach copyright laws

We can post links, we can't post verbatim the contents of the linked pages (short quotes are ok).

 

[UP4014]

Well they finally folded.

July 10 and QLD is open for business which will only help a VA2 launch and perhaps breathe a little bit more air into the VA1 sales as well.

What a relief.

WA hasn't 'folded' as you put it in protecting their own residents.

 

[jakeseven7]

WA hasn't 'folded' as you put it in protecting their own residents.

Wasn't talking about WA and they will follow shortly thereafter anyway. Regardless the ESB is what matters for the main purpose of this thread which is VA1/2's financial health and having the ESB open for business is a great move forward.

 

[Melburnian1]

Wasn't talking about WA and they will follow shortly thereafter anyway. Regardless the ESB is what matters for the main purpose of this thread which is VA1/2's financial health and having the ESB open for business is a great move forward.

Is 'ESB'an abbreviation of 'eastern states' borders' or something else?

 

[jase05]

Is 'ESB'an abbreviation of 'eastern states' borders' or something else?

Usually means Eastern seaboard

 

[Captain Halliday]

Is 'ESB'an abbreviation of 'eastern states' borders' or something else?

Usually means Eastern seaboard

So what does the B stand for then?

 

[AIRwin]

So what does the B stand for then?

Same as the B in USB?

 

[jase05]

Same as the B in USB?

Universal Serial Bus

 

[Melburnian1]

On Friday night 12 June (t'll be in 'The Weekend Australian' 13-14 June) an article from Terry McCrann re the administration. Part reads:



What Virgin Australia bidders are really fighting over

TERRY MCCRANN

'The funniest — sick — joke going around at the moment is the idea that we have two groups in an auction to buy Virgin; to take their chances on running a weak second airline against the dominant, financially strong and superbly structured and focused Qantas, into the challenges and monumental uncertainties facing airlines in the post-virus world.

In fact, the only thing they are “bidding” to buy is the right to get a range of other parties to donate their money to ensure that one of these Wall Street vultures can extract the greatest profit with the least risk and indeed the smallest financial contribution from the Virgin carcass.

The latest group who they want to put their hands in their pockets to ensure higher profits for them is you — the taxpayer.

They want the government to give them — either Bain Capital or Cyrus — another $180m or so by exclusively extending JobKeeper for Virgin Two. To have the taxpayer effectively pay the airline’s salary bill for the first six months of its life under its new owner.

The best way to understand what is going on in the auction behind closed doors is by way of this example: consider two people bidding to buy a house worth around, say $2m.

The one offering, say, $2.01m ends up winning over the other bid of, say, $2m flat. The $2.01m is paid; they own the house free and clear.

In the Virgin case the $2m “house” comes with a, say, $4m linked mortgage. It also comes with an order to spend $1m in mandatory repairs.

Clearly no one in their right mind would happily pay the $2m for the house, only to also pick up an immediate $5m liability. They’d in effect be paying $7m for a $2m asset...'

 

[jakeseven7]

On Friday night 12 June (t'll be in 'The Weekend Australian' 13-14 June) an article from Terry McCrann re the administration. Part reads:



What Virgin Australia bidders are really fighting over

TERRY MCCRANN

'The funniest — sick — joke going around at the moment is the idea that we have two groups in an auction to buy Virgin; to take their chances on running a weak second airline against the dominant, financially strong and superbly structured and focused Qantas, into the challenges and monumental uncertainties facing airlines in the post-virus world.

In fact, the only thing they are “bidding” to buy is the right to get a range of other parties to donate their money to ensure that one of these Wall Street vultures can extract the greatest profit with the least risk and indeed the smallest financial contribution from the Virgin carcass.

The latest group who they want to put their hands in their pockets to ensure higher profits for them is you — the taxpayer.

They want the government to give them — either Bain Capital or Cyrus — another $180m or so by exclusively extending JobKeeper for Virgin Two. To have the taxpayer effectively pay the airline’s salary bill for the first six months of its life under its new owner.

The best way to understand what is going on in the auction behind closed doors is by way of this example: consider two people bidding to buy a house worth around, say $2m.

The one offering, say, $2.01m ends up winning over the other bid of, say, $2m flat. The $2.01m is paid; they own the house free and clear.

In the Virgin case the $2m “house” comes with a, say, $4m linked mortgage. It also comes with an order to spend $1m in mandatory repairs.

Clearly no one in their right mind would happily pay the $2m for the house, only to also pick up an immediate $5m liability. They’d in effect be paying $7m for a $2m asset...'

Feds won’t give them a cent.

But will the QLD government...? that’s the question.

 

[oz_mark]

They want the government to give them — either Bain Capital or Cyrus — another $180m or so by exclusively extending JobKeeper for Virgin Two. To have the taxpayer effectively pay the airline’s salary bill for the first six months of its life under its new owner.

The questions to the government around Jobkeeper was about whether it would be extended to aviation sector, not exclusively to Virgin.

 

[burmans]

On Friday night 12 June (t'll be in 'The Weekend Australian' 13-14 June) an article from Terry McCrann re the administration. Part reads:



What Virgin Australia bidders are really fighting over

TERRY MCCRANN

'The funniest — sick — joke going around at the moment is the idea that we have two groups in an auction to buy Virgin; to take their chances on running a weak second airline against the dominant, financially strong and superbly structured and focused Qantas, into the challenges and monumental uncertainties facing airlines in the post-virus world.

In fact, the only thing they are “bidding” to buy is the right to get a range of other parties to donate their money to ensure that one of these Wall Street vultures can extract the greatest profit with the least risk and indeed the smallest financial contribution from the Virgin carcass.

The latest group who they want to put their hands in their pockets to ensure higher profits for them is you — the taxpayer.

They want the government to give them — either Bain Capital or Cyrus — another $180m or so by exclusively extending JobKeeper for Virgin Two. To have the taxpayer effectively pay the airline’s salary bill for the first six months of its life under its new owner.

The best way to understand what is going on in the auction behind closed doors is by way of this example: consider two people bidding to buy a house worth around, say $2m.

The one offering, say, $2.01m ends up winning over the other bid of, say, $2m flat. The $2.01m is paid; they own the house free and clear.

In the Virgin case the $2m “house” comes with a, say, $4m linked mortgage. It also comes with an order to spend $1m in mandatory repairs.

Clearly no one in their right mind would happily pay the $2m for the house, only to also pick up an immediate $5m liability. They’d in effect be paying $7m for a $2m asset...'

Ah the economist who was so rubbish the only job he could get was with a cough faux news outlet, clearly someone we can safely ignore.

 

[Franky]

Usually means Eastern seaboard

Which is similar but different to what we in the West call the RBF - the Rabbit Proof Fence, which is supposed to filter out all of those nasties from the centre of the universe, otherwise known as the ESB...