Virgin Australia bondholders look to stamp out private equity takeover with debt-for-equity offer

Bondholders of struggling airline Virgin Australia have made a last-ditch bid to keep the company out of the hands of private equity firms bidding for the beleaguered business.

Virgin Australia entered voluntary administration in April last month owing almost A$7bn to creditors.

The company, which had failed to turn a profit for seven years, was finally pushed over the edge by the Covid-19 pandemic after failing to be granted a A$1.4bn loan it had requested from the government.

A string of private equity houses have been circling the company since, including BGH Capital, Bain Capital, airline investment specialist Indigo Partners and Cyrus Capital Partners.

Bain Capital and Cyrus Capital made final and binding offers to administrator Deloitte at the start of this week.

But now bondholders representing about A$2bn are pushing for a debt-for-equity swap and A$1bn capital injection in an attempt to make the most of their exposure to the airline, Reuters reported.

It said that Broad Peak, a Singapore hedge fund backed by Temasek, was involved in the bondholders’ proposal, citing an unnamed source.

Deloitte is yet to comment on the bondholder proposal, and currently expects to select a preferred bidder for the company by June 30.

Source: AltAssets

Can’t stop reading? Read more