Virgin Australia to be sold to Bain Capital

[RAM]

I’m sure this surprises very few people on here, a very long article from a US PE expert about what may happen once the PE ringmasters finally sink their teeth into VA2


Virgin Australia buyer Bain to saddle airline in new debts, US private equity expert warns

Bain was part of a consortium that bought Toys R Us in 2005 — the company folded in 2018.

Private equity expert Eileen Appelbaum told a US Congressional inquiry that Toys R Us collapsed, in large part, because it was loaded up with debt by its new owners.

Professor Applebaum warns that a similar fate may await a revived Virgin Australia under Bain's ownership.

Starting with Virgin's aeroplanes, of which it owns half. "You can imagine that Bain would sell the aeroplanes to a leasing company and then Virgin Australia will have to rent the aeroplanes back and Bain will walk off with whatever they sold it for," Professor Appelbaum postulated.

Another common money-making strategy of private equity is what is known as the "Management Services Agreement", which Eileen Appelbaum said will be signed the day Bain takes control of Virgin. She believes the airline will be forced to pay paying hefty fees for advice and services it may, or may not, need.

"They're very aggressive in their use of debt, in their use of financial engineering," she said of Bain. "They put the companies that they buy at high risk from that point of view.

"But, on the other hand, nobody wants to give Virgin Australia any money, so it really has no choice”

Bain is buying Virgin, but the airline may end up paying for its own buyout, expert warns

Virgin Australia looks set to be saved from liquidation by US investment firm Bain Capital. But a leading private equity expert warns Bain's track record in its home country should ring alarm bells.

mobile.abc.net.au

Sounds exactly like what JS & AJ have done to Q. Sales & leasebacks as well as cashing in on long term terminal leases to reset them at higher annual rates in exchange for a quick profit hit ($1bn) which generated the required franking credits to allow the share buybacks which coincidentally helped achieve many of the senior exec's remuneration hurdles.

Hurdles that would not have been met otherwise.

 

[RAM]

The company received $49.3m in JobKeeper payments from the federal government, plus about $1.2bn in subsidised flights during the pandemic according to the note to creditors.

Curious that the 'mistake' was made for $1.2bn.

If you have online access, (or somebody else who has) can you please check to see if the figure has subsequently been corrected.

Not that I am suspicious of why that mistake was made shortly after Q revealed its Fed Govt money received (>$0.5bn).

 

[melb78]

And I briefly read that they still have not herd from Virgin group nor Branson about using it s name or amount of money to pay for the name

 

[jakeseven7]

And I briefly read that they still have not herd from Virgin group nor Branson about using it s name or amount of money to pay for the name

Don’t stress he will worm his way soon and extract his fat yearly royalty paycheck from VA2

 

[Carrots]

A rebrand (if/when the time is right) to V Australia could work - a name they've used before, and one that doesn't stray to far.

 

[melb78]

A rebrand (if/when the time is right) to V Australia could work - a name they've used before, and one that doesn't stray to far.

If they rebrand it will be a completely new name that has not been used before to make it more attractive to passengers and potential buyers if and when they sell the business down the track. but I doubt they will change it Branson will be there with his greedy hands.

 

[Melburnian1]

This is from Reuters not long ago (Wednesday 2 September 2020):

(a significant cut to fleet numbers):

Virgin Australia Holdings Ltd (VAH) expects to lose domestic market share to rival Qantas Airways Ltd (QAN) under its new business plan as it exits unprofitable routes, its chief executive said on Wednesday.

"I do expect we will lose market share because there are routes that weren't making any money," Paul Scurrah said at the CAPA Australia Pacific Aviation Summit.

"There will be markets where we do want to hold our own," he said. "We are looking at it market by market rather than nationally."

Qantas last month said it expected its domestic market share could rise to 70% from its pre-pandemic level of 60% as the market recovers because Virgin is reducing the size of its fleet...Under Bain's business plan, Virgin would cut a third of its workforce as part of an overhaul to focus on being a domestic and short-haul international Boeing Co BA.N 737 operator.

Scurrah said the airline plans to have 30 to 60 737s in operation in the next 12 months, depending on market conditions.

"We're not putting numbers on the starting fleet," he said. "We need to be flexible. With the arrangement with lessors we can do that."

 

[melb78]

Well today is the d day hopefully we all know soon enough what is going on behind closed doors.

 

[oz_mark]

Well today is the d day hopefully we all know soon enough what is going on behind closed doors.

I think the meeting should be underway (10am AEST), so hopefully we will know something later today.

 

[jakeseven7]

Doubt anything exciting or surprising will crop up at this stage.....

So technically is today the official 'death' of VA1? When does it legally get swallowed up by Bain and become VA2?

 

[RAM]

I think the meeting should be underway (10am AEST), so hopefully we will know something later today.

Invitation only for the meeting.

I had a look for a link before it started but there's nothing publicly available (he says looking at his completed but not scanned 'creditor's claim form).

 

[HappyFlyerFamily]

Invitation only for the meeting.

I had a look for a link before it started but there's nothing publicly available (he says looking at his completed but not scanned 'creditor's claim form).

Surely an inspired or ambitious journalist would have bought some unsecured debt at the alleged 1c to get a foothold into the meeting It’s a work deduction, no?

 

[oz_mark]

Doubt anything exciting or surprising will crop up at this stage.....

So technically is today the official 'death' of VA1? When does it legally get swallowed up by Bain and become VA2?

If the DOCAs are approved, then there is 15 days for the deeds to be signed.

Once the DOCAs have been completed, control passes to Bain. This is expected on or before 31 Oct.

 

[oz_mark]

Creditors have accepted the Bain proposal.

Virgin relaunch secured but COVID-19 risks still loom over workforce

The sale process marks the return of Australia's second carrier, which had been facing the prospect of complete shutdown and liquidation if no willing bidder was found.

www.brisbanetimes.com.au

 

[jakeseven7]

Let the gutting begin! I really hope they don't get rid of even more staff.

 

[MooTime]

Let the gutting begin! I really hope they don't get rid of even more staff.

mate you are so negative on this Virgin sale, really I love to hear both sides of the coin, but take a look at your recent 100 posts, c'mon mate, how about being a little optimistic. Or at least not completely expecting or wanting the worst.

This is good news for time being for so many people.

 

[jakeseven7]

mate you are so negative on this Virgin sale, really I love to hear both sides of the coin, but take a look at your recent 100 posts, c'mon mate, how about being a little optimistic. Or at least not completely expecting or wanting the worst.

This is good news for time being for so many people.

Having worked very closely with Bain, and other PE which I can't directly comment on, I'm deeply afraid and yes negative on the long term prospects I'm afraid. I'm actually worried about the end game in about 5+ years, what happens to VA2 when they flip it.

Why would I want the worst? Just really fear it from my experience with them, but feel free to block, that is what the button is there for.

 

[oz_mark]

Having worked very closely with Bain, and other PE which I can't directly comment on, I'm deeply afraid and yes negative on the long term prospects I'm afraid. I'm actually worried about the end game in about 5+ years, what happens to VA2 when they flip it.

Why would I want the worst? Just really fear it from my experience with them, but feel free to block, that is what the button is there for.

I think most of the options left for VA were PE of one flavour or another.

 

[jakeseven7]

Bain Capital to absorb Virgin Australia after creditors agree to $3.5 billion deal


US private equity firm Bain Capital is the new owner of Virgin Australia, with the largest group of creditors voting in favour of the $3.5 billion sale on Friday

• Virgin Australia's $3.5 billion sale to Bain Capital had been expected to pass with the backing of key unions
• The airline will no longer be a full-service carrier, operating with a far smaller fleet and more limited routes
• Bain has vowed to pay out all worker entitlements and honour travel credits with conditions

Unions representing many of Virgin's 9,000 employees voted yes to the sale of Australia's second-biggest airline at a lengthy creditors meeting.

Virgin Australia has been one of the biggest corporate casualties of the coronavirus crisis, making a third of its workforce redundant and will now transition to becoming a 100% foreign and privately owned entity.


There were suggestions that former Jetstar chief executive Jayne Hrdlicka might step in as the new chief executive. However, there was some union pushback and she is expected to take a board role, possibly as chair, following on from her advisory role to Bain during the bidding process.

Bain Capital becomes the new owner of Virgin Australia after creditors agree to $3.5 billion deal

US private equity firm Bain Capital is the new owner of Virgin Australia, with the largest group of creditors voting in favour of the $3.5 billion sale on Friday.

www.abc.net.au

 

[moa999]

So creditors still have to wait 6-9 months for their money