Retail Shareholders Wiped Out As Bain Capital Wins Bid For Virgin

Shareholders in Virgin Australia (VAH) have been wiped out in the sale of the failed airline to private equity group, Bain Capital.

A statement to the ASX on Friday morning from the Voluntary Administrators of Virgin Australia Holdings Limited named Bain as the winner of a beauty parade of possible bidders.

Bain has already gained the key nod from the Foreign Investment Review Board.

Virgin owes nearly $7 billion to creditors and the administrators said on Friday they are not certain how much they will get from the sale, but that shareholders – including some major airlines such as Singapore Airlines) will be wiped out.

Around 30 institutions and others own $2 billion in Virgin Australia bonds. From what the administrators from Deloitte didn’t say in Friday’s statement, they will not get back 100 cents in the dollar.

The administrators said they had received binding proposals from each of Bain Capital and Cyrus Capital Partners on June 22 (last Monday) as well as “several proposals from other interested parties this week, including a proposal from the representatives of an Ad Hoc group of bondholders of the Virgin Australia Group on 24 June 2020.”

“Having considered those bids, the Administrators are pleased to confirm they have now entered into a Sale and Implementation Deed with Bain Capital which will result in the sale and recapitalisation of the businesses of VAH and its subsidiaries (VAH Group).

“The Sale and Implementation Deed is subject to minimal conditions precedent such as regulatory approvals. Approval by the Australian Treasurer pursuant to Australian Foreign Investment Review laws has already been received by Bain Capital.

“No return to shareholders is anticipated. At this stage, it is not possible to determine the estimated return to creditors however an update will be provided ahead of the second meeting of creditors.

The Administrators said they “anticipate that their Report to Creditors pursuant to section 75-225(3) of Schedule 2 (Insolvency Practice Schedule) to the Corporations Act will be provided to creditors together with the Notice of the Second Creditors Meeting convened pursuant to section 439A of the Corporations Act, before the end of August 2020.”

That report to creditors will detail the estimated return to creditors and will provide further details with respect to the steps to be taken to complete the sale of the Virgin Australia Group.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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