Luckily Bain had the cash to purchase VA.
Time would have run out for Virgin Australia
Virgin Australia is getting a lift from new owners Bain Capital. Picture: David Clark
Virgin Australia would not have been able to continue to operate until the August 22 creditors’ meeting if administrators had not negotiated a sale and interim funding by June 30.
Documents filed in the Federal Court this week outlined the urgency of the situation facing the airline, which went into administration on April 21 with debts of $6.8bn.
An affidavit by administrator Vaughan Strawbridge also revealed an initial 85 groups were approached or registered their interest in buying Virgin Australia
As the process unfolded, 19 parties considered “potential purchasers” were given access to the data room, with the group whittled down to the final two — Bain Capital and Cyrus Capital Partners — over six weeks.
“The administrators formed the view the sale process needed to be conducted on an expedited time frame due to the significant cash restraints facing Virgin, the impact of COVID-19 on the business and the need to retain key contracts, assets, employees and regulatory approvals,” the affidavit said.
To assist with consideration of the competing proposals, Bain and Cyrus were asked to agree to provide interim funding for Virgin Australia so the airline could keep flying.
“The Virgin companies would not be able to continue to trade up to the date of the second creditors meeting (August 22) without receipt of the funding,” Mr Strawbridge’s affidavit said.
“That result would potentially lead to the administrators having to make decisions in relation to maintenance, flying schedules and other matters that may lead to the loss of necessary regulatory approvals and slots for takeoff and landing at airports, and more generally, result in a worse outcome for creditors.”
Virgin Australia has more than 60 planes parked at airports around the country, including in Brisbane. Picture: AAPThe deal ultimately struck with successful bidder Bain Capital was considered the “most favourable transaction available for the benefit of creditors and the Virgin companies as a whole, in so far as it provided the greatest prospect of the business remaining intact”.
Further details of the transaction were filed with the court in confidence, given the commercial sensitivity of the information.
Federal Court judge John Middleton granted the orders sought by the administrator excusing them from the payment of any debt or liability should the sale not go through and the property and assets of Virgin not be sufficient to cover those costs.
The interim funding provided by Bain Capital saw Virgin Australia announce a beefed-up domestic schedule this week, with the addition of 17 routes to the 11 currently being flown under the *federal government-subsidised minimal network.
In a further boost for the airline, Brisbane Airport confirmed Virgin Australia would be the first carrier to use the new parallel runway when it opened on Sunday week, July 12.
“As our airport’s home carrier and an airline that has always shown great confidence in Brisbane and Queensland as a place to do business, I am delighted to have Virgin Australia fly the first departure from Brisbane’s new runway,” said airport CEO Gert-Jan de Graaff.
“COVID-19 may have hampered some of our plans to mark this historic moment but it certainly has not detracted from our pride and sense of accomplishment.”
Virgin Australia chief executive Paul Scurrah said that the runway opening was a “turning point not only for Virgin Australia but for the broader tourism sector”.
“We’re really looking forward to marking this special occasion with the first departure to Cairns as part of the 73rd anniversary of flights between Brisbane and tropical north Queensland,” Mr Scurrah said.