Virgin Australia: Bondholders last-ditch proposal

The Administrators for Virgin Australia, Deloitte have reportedly received, very early this morning, a proposal from the AU$2 billion worth of bondholders. It’s a bold plan that would give them an equity stake and about 70¢ in the dollar. The re-capitalisation project would cancel the sale process, continue Virgin Australia’s ASX listing and put AU$1 billion in a pile available to the airline.

I hope the administrators from Deloitte weren’t hoping this process would give them an easy life!

With the binding bids arriving on Monday, the administrators have been grilling the two prospective purchasers, Cyrus and Bain with a view to formulating a recommendation for the creditors. Now they will have to carefully review this new proposal, and doubtless, incur additional fees from banking and legal advisors.

The bondholders may have a good argument:

The bondholders argue that by converting into listed shares with a fresh balance sheet and a diverse shareholder base, Virgin Australia could be “battle ready” to deal with a second COVID wave should one arise, according to the proposal.

Australian Financial Review (AFR)

The AFR has been providing rigorous reporting on this issue, so if you have access, the article is well worth reading.

2PAXfly Takeout

This is another timely reminder to wear your seatbelt when seated. Holding you close to your seat will protect you from the sort of injuries sustained on this flight, when unsecured passengers flew to the ceiling of the aircraft, and then came crashing down once the ‘drop’ ceased.

The hope will be that this is an anomaly – a ‘freak accident’ in casual parlance. If it is a systemic error either mechanical or electronic, then this is a larger concern for the airlines that fly Boeing Dreamliner 787 aircraft. Let’s hope it isn’t. If it is, it will pile on the woes to Boeing’s existing stack.

Just when you think its safe to go back in the water, a new bondholder shark appears!

Looks like the Deloitte administrators will be earning their fees, and burning the midnight oil before this process is over.