Virgin Australia Financially Secure? [Now in Voluntary Administration]

[jakeseven7]

Its a very dynamic scenario.

It is and the fact that the very state government that is desperate to keep you stuck in Brisbane has also got a foot on the throat of your business not letting you make any money by not allowing travel would have been a huge factor.

That and all the other premiers stuffing around with domestic border closures. Seriously.... would you buy a car if they closed all the roads and had wishy washy plans to open some, at some point maybe but not sure? Tough....

 

[ja1]

Not sure if that was specifically directed towards me , but largely reflects what I've been saying except I think that the Administrator's recommendation should take a medium-ish view into account. Putting another turn on the second para, if there is a realistic pathway to get, say 80c in the dollar in, say 5 years (discounted that might be 70 cents), Vs an offer that gives 40c in the dollar, now, but never any more, and other things being equal, it might get the Guernsey.

I know this isn't strictly relevant, sorry, but I have very fond memories of Monte Carlo simulation and it once made me quite a bit of money.

Not directed specifically at you but a general comment that it seems impossible for an administrator to aim for a long term and even a medium term 'best case' outcome. The pressure to get any outcome and the risks they are taking (in terms of being liable for debts while running the business under administration) lend itself to short term focus.

Nice point on MonteCarlo sims.. I worked with someone who ran lots of them in a nuclear research context we so had many conversations about that.. Sadly he didn't make money out of it the way you did and would love to hear the story of how that came about - though perhaps in another forum thread unless that money you made is going to link back into VA's financial security

Post automatically merged: Jun 26, 2020

With the announcement that Cyrus have pulled out this morning, does that imply the administrators are stuck with Bain's bid (and no opportunity to negotiate further?) or does it bring it back to a two horse race with the bondholders bid now forced to be considered in the absence of any other bid..

 

[jakeseven7]

SMH at this point provides slightly more information, apparently due to “lack of engagement” on the part of Deloitte.

Bain Capital strikes deal to buy Virgin Australia

Virgin's administrator says it has agreed to sell the bankrupt airline to Bain Capital but has offered no details about the size of the bid, job losses or how much money creditors will receive.

www.smh.com.au

Again it seems all the commentary all along about the poor process being run from Deloitte may have had some grains of truth...

Just announced, Bain Capital is winner as Cyrus have pulled out.
Lets see if they follow suit

It’s not inconceivable that Bain withdraw as well.... they are watching the same dynamics that QF are watching in the market place and it is dire.

They can’t even fly domestically yet! And no one knows how long it will be before they can - and with the behaviour of the states, who knows even if they open their borders if they will put quarantine restrictions on. Or worse if there are 2 cases in Adelaide will the WA government slam the borders closed with no notice again? How on earth can you business plan in this sort of environment? And how do you build any type of customer confidence when this is happening....

 

[BNEFlyer]

Releasing a statement to media before business opens on a Friday, nothing from Deloitte or VA (would be surprised if they knew before the statement was released). This could be a bluff/call for attention to engage more.

Bain won’t be the winning bid by default, and we should probably wait to hear from Deloitte. Particularly as bids are binding, unless there’s a very weak get out of jail free clause in the contract.

 

[Scr77]

3AW news says that Cyrus received an email receipt acknowledging bid submission, but that Deloitte hasn’t taken a phone call since!

 

[Stealthflyer]

Releasing a statement to media before business opens on a Friday, nothing from Deloitte or VA (would be surprised if they knew before the statement was released). This could be a bluff/call for attention to engage more.

Bain won’t be the winning bid by default, and we should probably wait to hear from Deloitte. Particularly as bids are binding, unless there’s a very weak get out of jail free clause in the contract.

The ABC article suggests the announced withdrawal is at least partly attention seeking:
Cyrus founder and chief investment officer Stephen Freidheim left open the door to a renewed bid.
"Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to re-instate our offer if the administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders — employees, customers, Velocity members and bondholders," he said in the statement.

Virgin bidder Cyrus Capital withdraws offer at last minute

 

[ja1]

It is and the fact that the very state government that is desperate to keep you stuck in Brisbane has also got a foot on the throat of your business not letting you make any money by not allowing travel would have been a huge factor.

That and all the other premiers stuffing around with domestic border closures. Seriously.... would you buy a car if they closed all the roads and had wishy washy plans to open some, at some point maybe but not sure? Tough....

You do realise that VA is HQ'ed out of BNE but that doesn't mean it has to fly all its planes out of BNE.. The state government is focused on keeping the office jobs and as much of the maintenance (engineering) work in BNE.

The state government isn't telling VA it can't fly the planes (and if there was sufficient demand they could fly routes out of any airport with the appropriate support (which is pretty much all the capital cities really but SYD and MEL for sure?)

Once again, how hard is it to comprehend that once people are dead or in hospital there is very little possibility of them 'making money' or participating in any economic activity or recovery. Or having a model to open borders but mandating isolation when you cross them puts you in exactly the same place except with a much larger enforcement bill to deal with.

Have talked to someone who travelled from SA to TAS and back - 14 days self isolation in each state as a result. They complied but I can imagine many people who simply would not.

 

[travel_bug]

The ABC article suggests the announced withdrawal is at least partly attention seeking:
Cyrus founder and chief investment officer Stephen Freidheim left open the door to a renewed bid.
"Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to re-instate our offer if the administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders — employees, customers, Velocity members and bondholders," he said in the statement.

Virgin bidder Cyrus Capital withdraws offer at last minute

The rolling developments this morning are very interesting - nice to know that even big corps can resort to teenage attention seeking tactics though

 

[ja1]

3AW news says that Cyrus received an email receipt acknowledging bid submission, but that Deloitte hasn’t taken a phone call since!

I've run tenders where the rules required acknowledging a tender submission but no further communication could be entered into (for probity reasons) except at specific documented intervals.

One of the rules of the game is if you can get the other party talking to you - you are denying them time to talk to a competitor and vendors aren't shy about following that approach..

I'm not saying these are the specific rules as written by Deloitte but it's not clear why they would take a phone call - what would they possibly want to talk about that wouldn't have been covered in their bid. Would it make sense that Deloitte are the ones who would be making the phone calls if they had questions ?

 

[BNEFlyer]

I've run tenders where the rules required acknowledging a tender submission but no further communication could be entered into (for probity reasons) except at specific documented intervals.

One of the rules of the game is if you can get the other party talking to you - you are denying them time to talk to a competitor and vendors aren't shy about following that approach..

I'm not saying these are the specific rules as written by Deloitte but it's not clear why they would take a phone call - what would they possibly want to talk about that wouldn't have been covered in their bid. Would it make sense that Deloitte are the ones who would be making the phone calls if they had questions ?

Also the bids were submitted four days ago, maybe Cyrus expected communication every day but to not have calls or emails replied to just yet doesn't seem odd in this circumstance.

 

[jakeseven7]

With the announcement that Cyrus have pulled out this morning, does that imply the administrators are stuck with Bain's bid (and no opportunity to negotiate further?) or does it bring it back to a two horse race with the bondholders bid now forced to be considered in the absence of any other bid..

Well, if not by Deloitte - the other parties will be forced to have a look at the bond holders offer now.... Wow....

Also Cyrus were a lot closer to Branson than Bain.... so maybe he may fall out of VA2’s future too... who knows. Game has now changed big time.

 

[moa999]

From prior articles Branson was discussing with both sides.
But it will all come down to $s - how much he wants to charge for continued licensing of the brand versus the cost of rebrand and repaint

 

[Major]

I have to wonder about the timing of Joyce's QF announcement.

I'm sure he could have delayed the dire news of his appreciation of the Australian aviation industry. I'm also sure he would take any opportunity to affect a potential competitor.

 

[Carrots]

I wonder if VA2 will stock Monte Carlo biscuits in their down marketed lounges?!

I'll vote for whoever guarantees this!

 

[melb78]

just saw on the headlines on sky news not sure it is true or not that Qf is asking a Gov bail out. if it is true I think there be a war on with the gov and VA admin. to my understand the unions poss to had a meeting last night with the admin and they said they were worried that they would be told that Bain was the winner.

 

[Carrots]

Looks like Joyce is calling for an extension of JobKeeper. Not dissimilar to what Deloitte's called for if memory serves?

Qantas joins chorus of calls to extend JobKeeper | Sky News Australia

 

[jakeseven7]

Looks like Joyce is calling for an extension of JobKeeper. Not dissimilar to what Deloitte's called for if memory serves?

Qantas joins chorus of calls to extend JobKeeper | Sky News Australia

Yes Deloitte went begging a few weeks back.

Again if it’s industry wide support especially in an industry that has been turned off directly with no ability to make money because of government actions - then it should be considered.

They just couldn’t consider it or bailouts just for poorly run companies like VA.

 

[melb78]

I think Deloitte has stuffed it up big time if they it is true that they have not returned phone calls or emails to Cyrus but has kept engaged with Bain Ove the last few days then Deloitte should have a good kick up the butt. plus they should bring out a statement asap.

 

[Carrots]

It really does appear to be more of a throw the toys out of the cot attention seeking moment than a legitimate exit -

This is a quote via Executive Traveller from the Cyrus statement -

"On the morning of 25 June 2020, Cyrus submitted a further unsolicited package of value improvements and other compelling measures to increase the value of the transaction, improve the return to unsecured bondholders and deliver more certainty for the administrators. This too received no response other than an acknowledgement of receipt."

"Despite the material improvements put forward, the administrators have still not engaged with Cyrus on its offer."

However, Freidheim left the door open for Cyrus to return to the table, saying the firm "would be willing to reinstate our offer if the administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders – employees, customers, Velocity members and bondholders."

Cyrus abandons Virgin Australia bid, putting Bain in the pilot's seat

 

[woodborer]

Yes Deloitte went begging a few weeks back.

Again if it’s industry wide support especially in an industry that has been turned off directly with no ability to make money because of government actions - then it should be considered.

They just couldn’t consider it or bailouts just for poorly run companies like VA.

Interesting really. When Virgin go asking what support their might be for the aviation sector it's seen as begging. When Qantas ask basically the same question, it's all fine.

Says something about folk on this board.