Virgin attracts 19 potential buyers, offers due this week, says administrator

Virgin Australia’s administrator says 19 parties interested in purchasing the airline have been granted access to a data room as of May 11.

May 12, 2020, updated May 12, 2020
Final bids for the airline close this week.  (Photo: AAP Image/Darren England)

Final bids for the airline close this week. (Photo: AAP Image/Darren England)

Non-binding indicative offers are due on May 15, according to an affidavit published by the Federal Court of Australia on Tuesday.

The airline entered voluntary administration last month, owing creditors nearly $7 billion and the administrators at Deloitte aim to agree a deal with a buyer by the end of June.

Previously, eight parties were believed to have signed confidentiality agreements to gain access to Virgin’s books as of April 30.

Private equity and distressed situation specialists Apollo Global Management, Oaktree Capital Management and BGH Capital are among the firms that have expressed interest in the purchase.

US-based airline investor group Indigo Partners is also believed to be looking at a possible deal.

Virgin Australia has 117 leased planes and engines with monthly rentals of $40 million, of which only 50 are operational due to the low demand brought on by the coronavirus pandemic, administrator Vaughan Strawbridge said in the affidavit.

He said the administrators were considering whether Virgin Australia would need interim funding to allow the business to keep operating until a second meeting of creditors, which they propose to hold in August.

The administrators are seeking permission to issue conditional credits to customers that had booked flights cancelled due to the pandemic which could be honoured by an acquirer, Strawbridge said.

“Potential buyers may be motivated to extend these conditional credits as part of any restructuring or recapitalisation of the Virgin Companies’ business for the purposes of maintaining and enhancing the customer goodwill associated with the Virgin Companies,” he said.

He added the airline is seeing a rise in credit card charge-backs from customers seeking refunds. That is a potential drain on cash it holds in accounts

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