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Virgin Australia bondholders working on potential revival plan: source
[SYDNEY] Virgin Australia Holdings bondholders are working on a revival plan for the airline involving a debt-to-equity swap if they are not satisfied with a sale offer, according to a person with knowledge of the matter.
Binding bids from finalists Bain Capital and Cyrus Capital Partners were due on Monday for Australia's second-biggest airline, which entered voluntary administration in April and owes nearly A$7 billion (S$6.68 billion) to creditors.
The airline owes about A$2 billion total to 6,500 unsecured bondholders, the second-most numerous creditor group behind employees that will vote on a deal at a meeting in August.
The bondholders are preparing the backup plan to help avoid liquidation if the administrator's preferred offer is not acceptable, the person with knowledge of the matter told Reuters on condition of anonymity.
The threat of a rival plan could also make the bidders and the administrator, Deloitte, more attuned to their interests.
Although not all of the details have been worked out, the bondholders want the debt-to-equity swap to happen soon, ahead of a later sale once coronavirus-related volatility in the airline industry subsides, the person said.
Deloitte did not respond immediately to a request for comment. It has previously said it intends to sign a binding deal with the winning bidder by June 30.
Virgin bondholders include FIIG Securities, Northern Trust Asset Management, Sargon CT and The Bank of New York Mellon, which are members of the administrator's committee of inspection.