Bain Capital finalises Virgin Australia deal

The administrator confirms creditor approvals for Bain’s deal as an outcome of the second meeting of creditors on 4 September.

Creditors of Virgin Australia have voted in favour of Bain Capital’s restructuring deal during the second meeting of creditors on Friday, according to a statement from the airline company, citing Deloitte as the administrator to Virgin Australia.

Boston-headquartered Bain Capital’s proposal to the creditors included 10 separate deeds of company arrangement, the legal contracts governing a company and its creditors’ relations after the end of the company’s voluntary administration.

Virgin Australia’s unsecured creditors will get between nine and 13 cents in the dollar on their claims, the statement showed. Other details of the agreements include Bain’s interim funding to the company from 1 July.

As Private Debt Investor reported on 13 August, the second meeting of creditors was pushed back to early September from August. Senior unsecured debt holders and other interested parties include Singapore’s Broad Peak Investment Advisers, Hong Kong’s Tor Investment Management, and Queensland Investment Corporation (QIC).

Now that Bain’s DOCAs have been approved by the creditors, the agreements will be signed and completed within 15 business days from 4 September. Once the DOCAs are signed, Deloitte will transfer the shares in the holding company of Virgin Australia to Bain Capital, subject to courts’ approvals. Further details were not available by publication time.

Virgin Australia is one of the first airline companies from Asia-Pacific to become distressed during the pandemic, since its voluntary administration process started in April. Its share trading on the Australian stock exchange has been suspended since April.

The airline group’s total liability was A$5.9 billion ($4.3 billion; €3.63 billion) and its cash balance was at A$1.7 billion, as per the 2019 annual report. The Australian financial year typically begins on 1 July and ends on 30 June the next year.

The airline industry seems to have been hit the hardest by the pandemic-led disruptions. “Financially, 2020 will go down as the worst year in the history of aviation,” said Alexandre de Juniac, director general and chief executive officer of International Air Transport Association, in a statement on 9 June, adding, “on average, every day of this year will add $230 million to industry losses. In total, that is a loss of $84.3 billion”.

Air passenger market demand in July stayed at significantly low levels as well, based on IATA’s monthly analysis of industry-wide indicators. Revenue passenger-kilometres for the global air passenger market fell by 79.8 percent year-on-year.