Thank you for reading the news about Etihad to operate flights to 29 destinations from July 1 and now with the details
Jeddah - Yasmine El Tohamy - Bain Capital agrees deal over Virgin Australia administrator to buy struggling airline
SYDNEY: US private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings to buy Australia’s second-biggest airline for an undisclosed sum, banking on an aviation industry recovery.
Bain’s bid was chosen over a rival offer from Cyrus Capital Partners and a recaptalization proposal put forward by Virgin Australia bondholders, administrator Deloitte said.
Deloitte said it was not yet possible to estimate the return to creditors and did not expect any return to shareholders. An update on the return will be provided ahead of a creditor’s meeting in August, it said.
Many contracts with suppliers and aircraft lessors must be renegotiated before the return to creditors can be finalized, a source with knowledge of the matter told Reuters on condition of anonymity.
The deal will need to be approved by 50 percent of creditors by value and 50 percent by number to be finalized.
A spokesman for the 6,000 unsecured bondholders owed A$2 billion ($1.4 billion) said that despite Deloitte’s selection of Bain, they would continue to push for genuine consideration of their rival debt-to-equity swap proposal.
Bain is using private equity as well as its distressed and special situation funds for the deal, according to Deloitte, which said the deal provided a “significant” injection of capital into the airline.
HIGHLIGHTS
- Not yet possible to estimate return to creditors.
- Offer picked over rival one from Cyrus.
- Deal will be voted on by creditors in August.
The Australian, the newspaper which carried the report, said Bain would inject A$600 million of cash up front, A$600 million to cover travel credits held by customers and A$450 million to cover employee entitlements, without saying where it got the information.
Deloitte and Bain declined to comment.
Bain plans to strengthen Virgin’s regional services and ensure the airline offers good value for leisure customers while continuing to serve business travelers, Mike Murphy, an Australia-based managing director at Bain, said in a statement.
Virgin Australia entered administration in April owing nearly A$7 billion to creditors, but is viewed as an attractive investment given the Australian domestic aviation market duopoly it shares with larger rival Qantas Airways.
Cyrus on Friday morning said it had pulled out of the bidding, citing Deloitte’s unwillingness to engage in meaningful talks.
The Bain proposal supports Virgin Australia’s current management team, led by Chief Executive Paul Scurrah, and its improvement plan for the airline, Deloitte said in a statement.
Virgin Australia has about 9,000 employees and Bain plans to keep 5,000 to 6,000 and operate 60 to 70 of its Boeing Co. 737 planes, Murphy told The Australian Financial Review on Friday, adding the airline could break even by February.
Qantas on Thursday said it would cut more than 20 percent of its 29,000-strong workforce because of the bleak international travel outlook associated with the coronavirus outbreak.
Virgin Australia has a smaller international business than Qantas and is more exposed to the domestic market.
These were the details of the news Etihad to operate flights to 29 destinations from July 1 for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.
It is also worth noting that the original news has been published and is available at Arab News and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.
