The next stage of Virgin Australia’s sale process is underway, with the two remaining bidders locking in their offers for the beleaguered airline.
Deloitte’s Vaughan Strawbridge, John Greig, Sal Algeri, and Richard Hughes received the offers from Bain Capital and Cyrus Capital Partners just before 2pm yesterday, after they were granted three weeks to put their best foot forward.
Virgin’s administrators and their advisors will now spend the next week carefully assessing each bid, before selecting a preferred suitor by Tuesday 30 June.
“With aviation around the world in the middle of a COVID-induced restricted operations, today we’ve reached another important milestone in our rigorous and competitive sale process, with Bain Capital and Cyrus Capital Partners submitting their final and binding offers,” Strawbridge said in a statement yesterday.
“Both have previously flagged some of their thinking around a future-state carrier publicly, including operating a smaller, single-branded domestic and short-haul international airline that also has growth potential.
“Ultimately, the size of the airline will be dependent on the timing and level of demand by customers as travel restrictions are eased.
Strawbridge said both Bain and Cyrus have engaged closely with the range of groups that have an interest in the outcome of Virgin’s administration process, from federal and state governments and unions, to creditor groups that include airports and aircraft financiers.
“As I’ve previously said, both Bain and Cyrus have done an enormous amount of work to get here today, are well-funded and are enthusiastic supporters, and see real value in this business going forward,” he said.
“On the basis of their public statements, both bidders are committed to seeing a strong, competitive and sustainable Virgin Australia operating into the future, employing many thousands of Australians, and supporting the tourism industry and state and national economies.
“Both bidders have also already received FIRB approval, and we would like to acknowledge the assistance of the federal government on this front.”
While it’s not fully clear what each bid entails, both Bain and Cyrus appear to be keen on rebirthing Virgin as a mid-market airline in between Qantas and Jetstar.
It’s also been reported that both bidders have agreed to keep the airline based in Brisbane, thanks to a last-minute deal done with the Queensland government that will see the successful suitor receive roughly $200 million in benefits.
Cyrus and Bain have also given travel agents a much-needed confidence boost, with both bidders committing to honouring the estimated $100 million worth of pre-paid tickets for flights purchased through members of the Australian Federation of Travel Agents.
However, as we’ve already seen during the sale process for Virgin, there could still be one more surprise in store, with The Sydney Morning Herald reporting that the airline’s bondholders were preparing an alternative offer that would see their $2 billion worth of debt swapped for equity in a new carrier.
While there was no mention of such a move by Virgin’s bondholders in Strawbridge’s press statement, speculation still lingers over whether there is still a wildcard to be played.
Featured image: iStock/Picturesque Japan
