Virgin Australia Financially Secure? [Now in Voluntary Administration]

[muppet]

Is this a greenmailing attempt along the lines of pay us off or we'll drag this out (while our 50 person team gets paid) until it results in liquidation and VA is defunct as the Air Certificate gets cancelled?
.....

Neither other creditors nor the administrators will be liable for the bond-holders’ fees in putting alternative proposals to administrators ... so I don’t see the point in them maximise their own losses....

 

[jakeseven7]

Is this a greenmailing attempt along the lines of pay us off or we'll drag this out (while our 50 person team gets paid) until it results in liquidation and VA is defunct as the Air Certificate gets cancelled?

Wow that would be a dirty play.... the timing is very interesting of this intervention into this very long drawn out fee generating Deloitte process.

 

[melb78]

as of 10am this morning all the bidders had have there bids in. now its the waiting game. I'm still fairly hopeful Cyrus will be the winner.

 

[jakeseven7]

Virgin Blue co-founder Rob Sherrard has been linked with an 11th-hour bid to acquire the airline after the final deadline for bids passed at 10am on Monday.

Selected reports said the stricken airline’s bondholders have drafted in a team of aviation experts to formulate an audacious bid that would involve swapping their $2 billion of debt for equity.

The final two bidders officially in the race are US investors Bain Capital and Cyrus Capital Partners, but reports have stated that, should either win, it would likely mean unsecured bondholders would be wiped out.

Now a report in The Australian Financial Review suggests the group has been “secretly working for weeks” on a plan to launch their own bid, which is being headed by restructuring experts Faraday Associates and Corrs Chambers Westgarth.

FULL ARTICLE:

Virgin Blue founder Sherrard linked as final deadline passes – Australian Aviation

australianaviation.com.au

 

[jakeseven7]

Midnight oil burns as Virgin bidders prepare for 10am deadline

Another Virgin Australia bid day, another unsolicited bidder trying to steal the day....

(Similar article to Aus Aviation above)

Midnight oil burns as Virgin bidders prepare for 10am deadline

Another Virgin Australia bid day, another unsolicited bidder trying to steal the day.

www.afr.com

 

[eastwest101]

Will be interesting to see if the last minute bidders/past deadline bidders even get a look in. Surely if they did this would derail the whole process wouldn't it? Whats the point of knocking out all bidders except for the shortlisted two of Bain and Cyrus, if anyone can come in later on and past the deadline that the final two were given?

Anyway - the earlier articles in The Australian had an interesting table that really showed how "similar" the Bain and Cyrus plans were to run VA2. Maybe this is just stuff you say to win the bidding process with no intention of doing any of it? Of course this is what they would be briefing the media and may or may not reflect what their plans were if they were selected as the successful bidder.

Interesting that both Bain and Cyrus are essentially agreeing with the general thrust of what Paul Scurrah was attempting to do, but obviously Scurrah got mugged by Covid-19 shut downs and debt plus the administration process before any possible turnaround could happen. Obviously if potential bidders believe that they have a "secret sauce" or unique solution that could magically turn around VA2 into being a profitable operation, then they aren't going to freely share that information with the public and their competitors are they?

I expect there is probably a two stage process going on here, with potential bidders saying/leaking certain things during the bidding process that the administrators/employees/unions/politicians/suppliers/ and potential customers and debtors all want to hear, and then a whole bunch of different stuff that will actually happen once/if a succesful bidder is handed the business over. Then the data room will be a vague memory and there will be all sorts of surprises and skeletons come out of the closet that we may not have heard before.

 

[HappyFlyerFamily]

The bond holders can vote for neither bid and hope enough of the other creditor by value don’t vote for any to stop any bid proceeding. But if the employees vote with say Cyrus then wouldnt they be at an advantage over Bain (no majority by number or value possibly)?

reading the snapshot of the previous post 3526. Bain seems better logically from a business perspective. Cyrus seems to be ripe for a lot of empty promises.

 

[jakeseven7]

I expect there is probably a two stage process going on here, with potential bidders saying/leaking certain things during the bidding process that the administrators/employees/unions/politicians/suppliers/ and potential customers and debtors all want to hear, and then a whole bunch of different stuff that will actually happen once/if a succesful bidder is handed the business over. Then the data room will be a vague memory and there will be all sorts of surprises and skeletons come out of the closet that we may not have heard before.

Exactly and the story will go 'Oh we just found out, oh we weren't told, oh its much worse than we thought.... etc' and then either Bain or Cyrus will boot a few 1000 more staff and say 'So sorry' to whatever union made them King/Queen. It is TEXTBOOK private equity.

reading the snapshot of the previous post 3526. Bain seems better logically from a business perspective. Cyrus seems to be ripe for a lot of empty promises.

This seems to be the consensus....

 

[antycbr]

Wow that would be a dirty play.... the timing is very interesting of this intervention into this very long drawn out fee generating Deloitte process.

I don't think it's that long and drawn out considering the scale and complexity of VA, and the liabilities involved. It's basically been fire up the Administration (staffing etc)> get your head around what is happening > work out the liabilities > set up a data room > issue an EOI call to market for long listing of bids > shortlisting of bids > binding bids. You may have been able to skip the longlist to shortlist part.

 

[Cubiscus]

Confirmed that the two binding offers have been submitted and both have received FIRB approval.

 

[I love to travel]

Queensland govt has kept VA in Brisbane with both bidders - see Courier Mail

 

[antycbr]

Confirmed that the two binding offers have been submitted and both have received FIRB approval.

The FIRB approval is important. According to The Australian on Friday there was speculation that some ministers were pushing for a FIRB intervention to ensure an Australian bid was on the table. Looks like the economic ministers have won the argument.

 

[Cubiscus]

The FIRB approval is important. According to The Australian on Friday there was speculation that some ministers were pushing for a FIRB intervention to ensure an Australian bid was on the table. Looks like the economic ministers have won the argument.

From the government's point of view I don't think they can say find a commercial solution, then handcuff them when they have viable options on the table.

 

[Dee#]

Just wondering when I can use my points at the Velocity shop again and clean them out. Thinking Im going to have to build up Kudos with Qantas now, (hopefully I've got Qatar platinum). Virgin may just not suit my purposes any more, (far used to prefer their attitude, and helpfulness and staff though) even if it all gets sorted as I'm not going to fly on a Jetstar type arrangement in the future and One World will be a lot more versatile.

 

[eastwest101]

The FIRB approval is important. According to The Australian on Friday there was speculation that some ministers were pushing for a FIRB intervention to ensure an Australian bid was on the table. Looks like the economic ministers have won the argument.

Thats pretty funny that some politicians would be expecting that, what were they going to do - write up a "Vigin Australia Sales Act" and ram it through parliament before the administration process finished up? I couldn't see that getting past numerous legal challenges either.

As we know - its called the 'Foreign Investment Review Board' not the "Knock out all potential overseas investors board", although the details and the politics of the FIRB is certainly open to potential political interference.

Maybe the requirement to pass FIRB was the reason for a quick move from EOI, to long list of bidders, to a shortlist of only 2 bidders? Whats the point of short listing a bid that would never get past FIRB approval? Would have been amusing if Deloitte has shortlisted say a Middle Eastern Sovereign Wealth Fund vs a mainland Chinese Airline/Enterprise.

Overall - since Covid-19 really hit, the general Australian regulatory framework and rules have temporarily 'relaxed' if anything, with the exception of FIRB review which has tightened up in particular, especially with anything to do with China and/or "strategic industries". Anything that was Australian, European, NZ, Canadian, US, UK, Japan, South Korea or from Singapore would probably pass FIRB without too much trouble, but Russian oligarchs, Middle eastern princes or PO Boxes in the Cayman Islands might have triggered a few morequestions from the FIRB.

 

[antycbr]

Just wondering when I can use my points at the Velocity shop again and clean them out. Thinking Im going to have to build up Kudos with Qantas now, (hopefully I've got Qatar platinum). Virgin may just not suit my purposes any more, (far used to prefer their attitude, and helpfulness and staff though) even if it all gets sorted as I'm not going to fly on a Jetstar type arrangement in the future and One World will be a lot more versatile.

I doubt the store will be allowing redemptions to the scale and extent they did previously for a while - as it will be like a run on the bank scenario. Velocity survived one of those in March and I doubt they're keen to repeat the expereince. Expect either a devaluation, a cap or a co-pay.

There is also no certainty that VA will look like Jetstar, it'll most likely be somewhere above that based on current public signals from the bidder.

 

[antycbr]

From the government's point of view I don't think they can say find a commercial solution, then handcuff them when they have viable options on the table.

Yep, I totally agree with that. Doesn't mean that the Government wouldn't try though. Having an Aussie VA would have helped politically with the inevitable assistance that will shortly be required by QF given the international shutdown.

I suspect a package will be under development in the Dept of Transport along these lines for assisting International Australian airlines - VA will get a proportion of that but with the lions share going to QF. It's too important strategically to maintain international capacity.

 

[travel_bug]

Apologies if it's already been mentioned, but from this ABC article quoting Australian Federation of Travel Agents (AFTA) Chairman Tom Manwaring:
Cyrus has confirmed it will honour existing bookings "booked and paid" if it's successful in the sale, AFTA is still waiting for a response from Bain.

It will be interesting if the "paid" from the "booked and paid" quote will include bookings made through use of Travel Bank or conditional credits, or only include flights paid with fresh cash that have not yet been cancelled. Either way, as mentioned previously, it provides more fuel to the idea that those of us with such credit amounts should try to make use of them with a booking if possible.

 

[antycbr]

Maybe the requirement to pass FIRB was the reason for a quick move from EOI, to long list of bidders, to a shortlist of only 2 bidders? Whats the point of short listing a bid that would never get past FIRB approval? Would have been amusing if Deloitte has shortlisted say a Middle Eastern Sovereign Wealth Fund vs a mainland Chinese Airline/Enterprise.

I think the reason was that having the discussions with more than 2 parties wasn't really possible in the 3 week period. The bidders need to have separate meetings with VA leadership, VA ops/network/fleet planners, aircraft leasing, creditors, airports, Queensland Government, Velocity, etc etc. That's a hell of a lot of meetings.

 

[jakeseven7]

I suspect a package will be under development in the Dept of Transport along these lines for assisting International Australian airlines - VA will get a proportion of that but with the lions share going to QF. It's too important strategically to maintain international capacity.

Couldn't have said it better myself