Virgin Australia has 20 potential buyers, deal seen by June: administrators

[SYDNEY] Virgin Australia Holdings's administrators said on Thursday they had given eight potential buyers access to a data room and were negotiating with another 12 about doing so as they seek to sell the country's second-biggest airline by end-June.

In an update after a first meeting of creditors owed nearly A$7 billion (S$6.47 billion), administrators from Deloitte Australia said they had appointed Morgan Stanley to run the sales process alongside Houlihan Lokey.

The administrators were appointed this month to restructure and sell Virgin, the Asia-Pacific airline industry's biggest victim of the coronavirus crisis so far.

The potential buyers that have signed non-disclosure agreements have received access to a data room, Deloitte said in a statement.

"In terms of next steps, mid-May is currently the timeframe for the receipt of indicative offers," administrator Vaughan Strawbridge said. "Binding offers will then be required in June. We remain confident that our target of achieving a sale by the end of June is achievable."

Private equity and distressed situation specialists Apollo Global Management, Oaktree Capital Management and BGH Capital are among the firms that have expressed interest in the purchase, Reuters has reported, citing five sources.

US based airline investor group Indigo Partners is also looking at a possible deal, three sources familiar with sales process said on condition of confidentiality. Indigo declined to comment.

Deloitte said it would seek court orders to extend by three months a May 22 deadline to hold a second meeting with creditors. Delaying it to Aug 22 would give it more time to investigate the company's affairs and find a buyer, it said.

Virgin owes A$2.3 billion in secured debt to banks and aircraft financiers, A$2 billion to unsecured bondholders, A$1.9 billion to aircraft lessors, and A$450 million to employees.

Trade creditors are also owed A$167 million and landlords are owed A$71 million, court documents show.

Mr Strawbridge said during the meeting that there probably were sufficient assets to cover employee entitlements, but that the administrators had put a moratorium on the coupon payments on the airline's unsecured bonds to preserve the company's cash balance, a creditor told Reuters.

Mr Strawbridge could not estimate the value of those bonds, said the creditor, who declined to be named for fear of breaching confidentiality.

Deloitte did not immediately respond to a request for comment on Strawbridge's comments.

For now, Virgin is flying a skeleton schedule under its regular management team as administrators seek a buyer for the entire operation.

REUTERS