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The Virgin Australia sale process has been thrown into a spin by an eleventh-hour $1bn rescue proposal by its Singapore government-backed bond holders which has been criticised by some unions and put fresh pressure on the administrator, Deloitte’s Vaughan Strawbridge.
Six days before Mr Strawbridge was due to the choose between US firms Bain and Cyrus as the airline’s new owners, representatives of 30-plus global institutions and 6000 mum and dad investors delivered the debt-for-equity plan to Mr Strawbridge early on Wednesday morning.
The move would keep Virgin Australia as a publicly listed company rather than, as one source close to the bond holders put it on Wednesday, see it “disappear into the opaque world of private ownership”.
Under the deal, the bond holders would provide $125m upfront to Deloitte to fund the remainder of the administration process, and a further capital injection of $800m.
Virgin Australia went into voluntary administration on April 21 owing $6.8bn to more than 15,000 creditors, including $2.1bn to bond holders.
Converting debt to equity would clear up to $3bn from Virgin’s balance sheet, putting the airline in a much stronger financial position should a second wave of COVID-19 occur.
This article first appeared on www.theaustralian.com.au
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