Virgin Australia to be sold to Bain Capital

[Melburnian1]

This is an article from 'SMH' that may not be quite as up to date as the 'AFR' article above. Friday 10 July 2020:


'Virgin's bondholders have revealed they are planning to launch a last-gasp bid to take the failed airline off its intended new owners at Bain Capital by asking creditors to the failed airline to vote on an alternative proposal at an upcoming meeting in August.

Lawyers for a group of bondholders told the Federal Court this morning that their clients planned to put forward a formal deed of company arrangement (DOCA) at the second creditors' meeting and allow creditors to vote between their proposal and one from the administrator-selected purchaser Bain Capital...'

 

[moa999]

Interesting.
I'd think there only real chance would be convincing employee groups that their proposal is better than Bain's.

Without all the details but i'd think senior debt holders would prefer the certainty of Bain's offer. Would also assume that you couldn't combine the proposals as the PE model is for minimal debt (and full control) to maximise returns

 

[jakeseven7]

And there goes that "joke of an attempt" by Singapore Inc/Temasek to try to grab control of VA(H) from the back door via the bondholders..

Does that squash VA2 joining Star Alliance for good now?

 

[exceladdict]

Does that squash VA2 joining Star Alliance for good now?

I think even VA joining Oneworld wouldn't quash the rumours of them joining Star Alliance.

 

[Melburnian1]

This is part of a further 'The Australian' online article (Friday 10 July 2020) regarding the Federal Court hearing regarding bondholders.

Quite interesting:

"...In any event, (the bondholders) would receive a report to creditors and that’s the ordinary means by which creditors receive information that facilitates their ability to put together an alternative DOCA. What does not happen is early access to the totality of confidential transaction documents.” Judge Middleton responded that not providing enough information could leave the administrators open to litigation, if creditors felt they were not well enough informed to make a decision. “One has to look at where we’re leading with all this. I’m looking at the interests of the creditors primarily at the moment,” Judge Middleton said.

Although he did not grant the bondholders’ application for access he put the administrators on notice to provide as much information as possible beyond “commercially sensitive” material.

“I’m advocating for as much communication to alleviate people’s concerns but, more importantly, to gather all the information and all the options that will be available for the second creditors’ meeting and that’s the important thing,” Judge Middleton said.

He invited the bondholders to take further court action if they were not satisfied with the information provided.

A spokesman for the bondholders described the hearing as an “important step forward” that would allow them to put their proposal to creditors after getting the information they’d been seeking.

“We look forward to engaging with the administrators in this regard as well as with other Virgin stakeholders to present the recapitalisation plan which we believe is in the best interests of Virgin employees, stakeholders and creditors, including the thousands of Australian bondholders and institutions that have already invested $2bn in Virgin Australia,” he said.

A spokesman for Deloitte declined to comment.

The second creditors meeting is set down for August 22..."

 

[AIRwin]

The second creditors meeting is set down for August 22...

Friday August 21

 

[andrewpf]

Apologies if this has previously been asked and answered; but are customers with funds owing (e.g. travel bank) 'creditors' and if so, what voting rights do we have?

 

[ja1]

Apologies if this has previously been asked and answered; but are customers with funds owing (e.g. travel bank) 'creditors' and if so, what voting rights do we have?

My understanding is 'yes'.

Basically if a company owes you money (i.e they have accepted your money for goods and services) and the goods aren't delivered or the service hasn't been performed, you are a creditor.

There are different classes of creditors. Secured. Unsecured. Employee.

The question really isn't so much whether you're a creditor (lots of people end up being classified as such) but whether you fall into the category that the administrator notifies you of being a creditor and as such you then show up at the various meetings for creditors.

ASIC says that the administrator is required to notify as many of the creditors as practical (but doesn't require every single creditor to be notified). It doesn't seem to indicate that if you aren't notified that as a creditor you can't turn up to the meetings.

As a creditor you effectively get one vote, irrespective of how much the corporation owes you. This is why it's important for the administrators to get the employees to agree to any terms as they are effectively the largest single 'block' of creditors who might vote in a particular direction, even if they aren't owed the largest amount of money.

My understanding of preference is:

secured debt holders are > employees which in turn are > unsecured debt holders (e.g. trade suppliers and customers).

share holders are < all of the above and will usually end up with $0 after all debts are paid or in the event that the company is 'sold' as a going concern.

 

[ja1]

Friday August 21

Is anyone from here (i.e the forum) going to this creditors meeting and/or would report back on what happens ? It'd be interesting to see how many people are actually going to turn up and to understand the process for how you would be admitted to the meeting.

And if you are going, wear a mask and remember social distancing..

(which leads to.. can you have creditors meetings online now to limit in person gatherings?)

 

[equus]

Yes you can have online creditors meetings.

 

[SydneySwan]

Yes you can have online creditors meetings.

Is the VA meeting online? If so all of us with credits could attend remotely and presumably vote.

 

[Melburnian1]

Is the VA meeting online? If so all of us with credits could attend remotely and presumably vote.

I believe it will be, just as the earlier other two meetings were.

Wouldn't you have to submit a 'Proof of Debt' form (available on Deloittes' website) and importantly have your claim accepted by the administrators before you could vote?

 

[RAM]

The attempt by the bondholders to reveal the details of the Bain sale agreement has been thrown out.

Virgin bondholders can't access sale documents, mull alternative offer

Broad Peak Investment Advisers and Tor Investment Management have received a decisive blow to their efforts to unlock secret documents.

www.afr.com

...finally stopped being lazy and dug a little into one of the agitators, 'Tor Investment Mgmt'.

One of its founders' surname is Turnbull, yes a direct relation of Malcolm. Their website is a single page with photos that keep changing - no details listed for anything. A 'private hedge fund' specialising in debt situations AKA vulture fund perhaps?

Has an address listed as a high rise tower in HK - just no floor given. Latest data suggests they have less than $150m under mgmt.

Sure are one of the big (wannabees?) boys. NOT. Why haven't any of the media done the slightest due diligence?

Broad Peak Investment Advisors

Better than I thought, has a name very close to but apparently has no links with Broad Peak Advisors. Singapore status listed as 'hedge fund'....

Hard to find any actual hard information - even LinkIn 'created' the listing for them with no contact by the company. Listed as under 15 employees but number not known. Only 1 name found as a current contact but phone number does not work for some reason? Even the Monetary Authority of Singapore lists them with just one person entitled CEO.

Another mover & shaker in the financial world with the Australian media hanging off every word.

Time for a complaint to ASIC/APRA perhaps?

 

[RAM]

My understanding is 'yes'.

Basically if a company owes you money (i.e they have accepted your money for goods and services) and the goods aren't delivered or the service hasn't been performed, you are a creditor.

There are different classes of creditors. Secured. Unsecured. Employee.

The question really isn't so much whether you're a creditor (lots of people end up being classified as such) but whether you fall into the category that the administrator notifies you of being a creditor and as such you then show up at the various meetings for creditors.

ASIC says that the administrator is required to notify as many of the creditors as practical (but doesn't require every single creditor to be notified). It doesn't seem to indicate that if you aren't notified that as a creditor you can't turn up to the meetings.

As a creditor you effectively get one vote, irrespective of how much the corporation owes you. This is why it's important for the administrators to get the employees to agree to any terms as they are effectively the largest single 'block' of creditors who might vote in a particular direction, even if they aren't owed the largest amount of money.

My understanding of preference is:

secured debt holders are > employees which in turn are > unsecured debt holders (e.g. trade suppliers and customers).

share holders are < all of the above and will usually end up with $0 after all debts are paid or in the event that the company is 'sold' as a going concern.

Nearly a perfect answer.

An administrator is required to notify all creditors....

Yes but notification, except for mega-creditors, is generally by way of notices published in one or more newspapers (which was done) calling for any party who believes they are a creditor to contact the administrators to download a form registering their interest in the proceedings. That form requires proof (of various kinds) or substantiation that you are indeed a creditor & proof of the quantum.

Virgin Australia | Deloitte Australia | Restructuring, Insolvency & Financial Advisory

Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes were appointed Joint and Several Administrators (Administrators) of Virgin on 20 April 2020, pursuant to the provisions of Section 436A of the Corporations Act 2001 (Act).

www2.deloitte.com

If Deloittes accepts you are a creditor then you will get sent out a copy of all relevant material to enable you to make an informed choice over the proposed DOCA to be voted on at the August meeting.

DO IT!

You may well have more right to be involved than either Tor or Broad Peak - and look what they've been up to!

 

[serfty]

DO IT!

There are 38 listed companies (ACN's) on the form. Looking at my E-ticket for which I now hold a "Conditional Credit" I see an ABN for Virgin Australia Airlines Pty Ltd of 36 090 670 965 - that likely equates to the ACN 090 670 965 on the list.

 

[drron]

And @RAM a little further digging leads you the true Head Office of Tor Investments -the Cayman Islands.Quelle surprise.

SEC FORM D/A

www.sec.gov

 

[Aus ATC]

As a creditor you effectively get one vote, irrespective of how much the corporation owes you. This is why it's important for the administrators to get the employees to agree to any terms as they are effectively the largest single 'block' of creditors who might vote in a particular direction, even if they aren't owed the largest amount of money.

Wouldn't those customers owed money (of which I (or more correctly Mrs Aus ATC) am but a minor one) constitute greater numbers than the 9000 employees?

 

[eastwest101]

Wouldn't those customers owed money (of which I (or more correctly Mrs Aus ATC) am but a minor one) constitute greater numbers than the 9000 employees?

It would be an interesting argument to make that any person with a VA credit voucher or travel bank balance is a creditor, provided they made the info known to deloitte I don't see how Deloitte could deny those people aren't creditors? A screen shot of your travel bank balance should be sufficient proof. I actually can't believe that there hasn't been groups already active gaining proxies for large numbers of numerous airline customer creditors, it wouldn't take much to swing a few thousand creditors into some sizeable proxy numbers that might exceed the number of staff pretty easily, thus swinging the balance of numbers (but not value) in the second creditors meeting, so if someone can gatecrash the second creditors meeting with superior numbers of creditors and a higher value bid it's theoretically possible to trump the self declared "King makers" of the staff (by numbers) and even sideline Deloitte. Remember Deloitte only get to cast the deciding vote in a stalemate between numbers and value.

If nothing else it would be another avenue for any unsuccesful bidders or parties to take further legal action against Deloitte? They just need one 'disenfranchised creditor' to open up a whole new array of legal actions.

As I said before, I hope Deloitte have all paid their professional indemnity insurance and are on first name terms with some lawyers.

Expecting ASIC to do anything about a PO box in the Cayman Islands attempting to purchase an airline is pretty optimistic. ASIC have already demonstrated that they are the most ineffective regulator in the nation.

 

[serfty]

If nothing else it would be another avenue for any unsuccesful bidders or parties to take further legal action against Deloitte? They just need one 'disenfranchised creditor' to open up a whole new array of legal actions

Personally, having a conditional credit myself and with the info that Bain will honour these, unless something to the contrary appears, I'd be voting for, not against that deal.

 

[oz_mark]

Wouldn't those customers owed money (of which I (or more correctly Mrs Aus ATC) am but a minor one) constitute greater numbers than the 9000 employees?

There are tens of thousands of customers that could register as creditors.