Bondholders back in for Virgin Australia after administrator selects rival Bain deal

SYDNEY (Reuters) - Bondholders in Virgin Australia Holdings Ltd VAH.AX, in administration since April, on Monday submitted an updated proposal to take over the struggling company that rivals the approach from Bain Capital selected by administrator Deloitte.

FILE PHOTO: Travelers stand at a Virgin Australia Airlines counter at Kingsford Smith International Airport, following the coronavirus outbreak, in Sydney, Australia, March 18, 2020. REUTERS/Loren Elliott/File Photo

The new proposal from bondholders Broad Peak Investment Advisers and Tor Investment Management is “substantially the same” as a recapitalisation pitch for Australia’s second-biggest airline they lodged last month, a spokesman said in a statement.

The spokesman said the bondholders were seeking to work cooperatively and constructively with Deloitte to receive access to stakeholders and information ahead of an Aug. 26 meeting at which a deal for the future running of the company is to be finalised.

Deloitte told creditors on July 17 it had selected the Bain proposal for a deed of company arrangement because it provided certainty over a transaction being completed, immediate funding for the business and resulted in the best outcome for company creditors, including employees, as a whole.

Virgin Australia entered voluntary administration in April owing A$7 billion ($4.89 billion) to creditors, having been struggling financially even before the coronavirus pandemic slammed the travel and airline industries.

According to a court submission, the original proposal by Broad Peak and Tor - which hold around A$300 million of the airline’s A$2 billion of unsecured bonds - involved interim funding to allow Virgin to continue operating.

It also provided for the conversion of noteholders’ and certain other unsecured creditors’ debts into equity worth around 69 cents on the dollar, with an option for creditors to sell their shares for cash.

A Deloitte spokesman said on Monday that a proposal had been received and his firm had no further comment.

Deloitte told creditors on July 17 would issue a report to creditors on Aug. 19, ahead of a vote on the proposed arrangement with Bain on Aug. 26.

The bondholder proposal could also be presented at the same meeting, a lawyer representing the bondholders said at a court hearing this month.

Reporting by Jamie Freed; Editing by Kenneth Maxwell