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Virgin Australia (ASX:VAH) - CEO, Paul Scurrah - The Market Herald
CEO, Paul Scurrah
Source: The Australian
  • Troubled airline Virgin Australia (VAH) has settled on a sale agreement with investment firm Bain Capital
  • It comes after the ASX lister went into administration in early April, as the COVID-19 pandemic put flights on hold worldwide and forced mass redundancies
  • Virgin Administrator Deloitte said the company attracted several bids in the last week alone, as punters tried to resurrect the bankrupt airline
  • Ultimately, however, Bain emerged as the frontrunner today after Cyrus Capital, a historical Virgin America investor, dropped out of the race
  • Now, Bain will buy and recapitalise the Virgin Australia group and its subsidiaries
  • Unfortunately, Virgin shareholders won't receive a return on their investment
  • Virgin shares are still locked up today, last trading for 8.6 cents each back in April

Troubled airline Virgin Australia (VAH) has settled on a sale agreement with U.S. investment firm Bain Capital.

It comes after the ASX lister went into administration in early April, as the COVID-19 pandemic put flights on hold worldwide and forced mass redundancies.

The bankrupt airline was left with almost $7 billion in debt and on the hunt for a new buyer. As a result, in April, multinational accountant Deloitte signed on to help Virgin find a partner.

While many bids were submitted, big investment firms Bain and Cyrus Capital emerged as firm favourites in recent weeks.

However, just days away from the June 30 decision deadline, Virgin bondholders banded together in a bid to compete with the private equity players. Those involved are set to lose a $2 billion investment stake because of Virgin's collapse.

Ultimately, however, Bain emerged as the frontrunner this morning after Cyrus, a historical Virgin America investor alongside business magnate Richard Branson, dropped out of the race.

In a statement today, Cyrus says it withdrew its bid following a lack of engagement from Virgin administrator Deloitte.

"I am disappointed that it has become necessary to withdraw our offer," said Cyrus' founder and chief investment officer, Stephen Freidheim.

Cyrus said it had difficulty getting Deloitte to "meaningfully engage" with its offer, even after it tried to "sweeten its proposal" on Thursday. As a result, the New-York based bidder dropped out, leaving Bain as the last man standing.

Under the agreement, the Virgin Australia group — and its subsidiaries — will be sold and recapitalised under Bain's wing.

Unfortunately, however, Virgin shareholders won't receive a return on their investment.

Virgin shares are still locked up today, last trading for 8.6 cents each back in April.


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