Virgin boss urges workers to ignore bondholder ‘noise’


“If for some reason an alternative proposal was allowed to be put to the meeting to be voted on, it would be very disruptive to the sale process and problematic for us,” Mr Scurrah said in a note sent to staff seen by this masthead. “Any delay to the administration process would mean we remain in administration for a longer period.”

“From day one, the goal has been, and remains, to bring this business out of administration as quickly as
possible and avoid the potential outcomes of going into liquidation, which is not something any of us
want.”

Mr Scurrah said it was important staff knew that the bondholder proposal was “non-binding, conditional, indicative and incomplete”.

Virgn’s administrator Deloitte has, meanwhile, told members of Virgin’s creditors’ committee of inspection in a letter sent on Thursday that the sale deal signed with Bain on June 26 precluded it from considering or even discussing any other deal.

“This remains the position unless the asset sale to Bain Capital is set aside by the court,” joint administrator Vaughan Strawbridge said in the letter, seen by this masthead. “Currently, neither [Broad Peak and Tor] or any other party, have brought an application to court seeking to set aside the asset sale to Bain Capital.”

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He said the vote of creditors early next month would only determine how Virgin was sold – either via the asset sale or a deed of company arrangement (DOCA) – and not who it was sold to.

“We do not see how a competing DOCA that deals with the assets of the business that are subject to the agreement with Bain Capital can be put to the creditors,” Mr Strawbridge said.

A key reason Deloitte chose to enter an asset sale was to secure funding to keep Virgin out of liquidation, with Bain immediately taking over financial liability of the airline. Mr Strawbridge said Broad Peak and Tor had not shown any evidence of funding and that their proposal remained “highly conditional”.

Virgin went into voluntary administration with debts of $6.8 billion in April after the COVID-19 pandemic forced it to ground most of its fleet.



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Virgin co-founder breaks silence over role in rebel bondholder bid


“We believe in the airline, firmly support the vision of management and are confident that Virgin can return to being a successful airline.”

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Virgin’s administrators Deloitte has said the bondholders’ plan cannot be considered because it has already signed a binding sale deed with Bain. Despite that, the bondholder are taking court action to try and force Deloitte to put their alternative proposal to a vote at its second creditors’ meeting in September.

Bondholders, which include around 30 major institutional investors and around 6000 retail investors, would swap their debts for shares in Virgin, which would remain listed on the ASX, and contribute to a $800 million capitalisation under the plan.

“We also want to be very clear that we don’t want to run the airline,” Mr Sherrard said. “That is the job of the existing management team. We are focused on rebuilding our airline through a solid recapitalisation proposal.”



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Cornonavirus: Crisis-hit Virgin Atlantic files for bankruptcy


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Virgin Atlantic has filed for bankruptcy in the US as the global aviation industry feels the impact of the coronavirus pandemic.

The UK-based airline is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.

It is the second Virgin-branded airline to struggle this year. Virgin Australia went into administration in April.

Meanwhile, Virgin Australia’s new owner Bain Capital is set to cut 3,000 jobs.

Virgin Atlantic’s US bankruptcy court filing said it had negotiated a deal with stakeholders “for a consensual recapitalization” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth”.

The move comes less than a month after the company said it had agreed a rescue deal worth £1.2bn ($1.6bn) to secure its future beyond the coronavirus crisis.

Under that plan Richard Branson’s Virgin Group injected £200m, with additional funds provided by investors and creditors.

The billionaire Virgin boss had a request for UK government money rejected, leaving the airline in a race against time to secure new investment.

The US filing is tied to a separate action filed in a British court, where Virgin Atlantic obtained approval on Tuesday to convene meetings of affected creditors to vote on the plan on 25 August.

In May, Virgin Atlantic, which is 51% owned by Virgin Group and 49% by US airline Delta, announced that it would cut more than 3,000 jobs in the UK and close its operation at Gatwick airport.

Virgin Australia cuts

Meanwhile, Virgin Australia’s new owner, the US private equity group Bain Capital, said it will cut 3,000 jobs, which is about a third of the airline’s employees.

The turnaround plan for Australia’s second largest airline will also see it retire the budget brand Tigerair.

“Working with Bain Capital, we will accelerate our plan to deliver a strong future in a challenging domestic and global aviation market,” Virgin Australia’s chief executive Paul Scurrah said.

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Media captionA Virgin Australia flight attendant says goodbye on a final international flight

In April, Virgin Australia went into voluntary administration, making it Australia’s first big corporate casualty of the coronavirus pandemic.

The following month it was bought by Bain Capital, which said it supported the airline’s current management team and its turnaround plan for the business.

Bain also promised a “significant injection of capital” that would help Virgin Australia recapitalise and retain thousands of jobs.

Carriers around the world are struggling as they deal with the severe plunge in air travel caused by the coronavirus pandemic.

The International Air Transport Association warned in June that the slump will drive airline losses of more than $84bn (£64bn) this year.



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Virgin Australia set to announce job losses, re-launch plan


Bain’s local boss Mike Murphy has said that the firm did not want to turn Virgin back into a budget airline, but would stop trying to compete directly with Qantas for the top-end of the market.

He said he saw a “sweet spot” for Virgin as a hybrid carrier positioned between Jetstar and Qantas.

Virgin has been expected to cut its fleet down from 132 planes to around 70 Boeing 737s focused on profitable domestic routes, while scuttling the budget TigerAir brand. However uncertainty around the COVID-19 pandemic, and in particular Melbourne’s plunge back into lock down in recent weeks, has made it difficult to plan for exactly how many planes will return to the domestic network.

Virgin chief executive Paul Scurrah’s early re-launch plans included an eventual return to international flying with a new fleet of Boeing 787 Dreamliners.

Deloitte and Bain have kept the details of their sale agreement secret, including the transaction price and how much will be paid to Virgin’s unsecured creditors, which includes bondholders who are owed almost $2 billion.



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Richard Branson’s Virgin Galactic unveils a spaceship cabin fit for the very rich


“When we created Virgin Galactic, we started with what we believed would be an optimal customer experience, and then built the spaceship around it,” British entrepreneur and Virgin founder Richard Branson said.

The VSS Unity reaches space not from a launchpad, but from a larger aircraft.

At or above 45,000 feet, the carrier plane drops the spacecraft, which then ignites its rocket engine, propelling its two pilots and six passengers to an altitude of more than 109 kilometres above the Earth, which according to NASA, is technically “space.”

The long journey to commercial flight stretches back to 2004, when Branson founded Virgin Galactic. Arguably the pioneer in the field, his dream was dealt a deadly setback in October 2014, when a test pilot was killed during a flight in California. The tragedy informed major redesign work over the next six years. But financial struggles would follow.

In 2018, Branson rejected a proposed $US1 billion investment from Saudi Arabia after the murder of US resident and Washington Post columnist Jamal Khashoggi by the kingdom’s agents. Branson instead decided to take the company public through a 2019 merger with Social Capital Hedosophia Holdings, California-based special purpose acquisition, or “blank-cheque” company, which took a 49 per cent stake.

Virgin Galactic plans to fly five spaceships in coming years and to expand internationally. But Branson isn’t the only space billionaire dreaming of building a flourishing space-tourism industry.

Amazon.com founder Jeff Bezos, the world’s wealthiest person, founded Blue Origin to help expand private space exploration; and Elon Musk’s Space Exploration Technologies is constructing a massive Starship in South Texas to fly astronauts to the moon and, eventually, would-be colonisers to Mars.

Virgin Galactic plans to lean heavily on mood lighting, too- a feature UK-based Virgin Atlantic Airways pioneered on its long-haul flights. At certain points, all the lights will be switched off.

The VSS Unity’s cabin has a dozen windows to offer plentiful vistas of the Earth, as well as 16 cameras to capture both videos and still images as souvenirs. Seatback screens provide flight data and a communications system for astronaut-passengers to speak with the pilots up front.

Those pilots will be able to recline passenger seats to help them better manage the forces of gravity, which can reach four times that of the Earth’s surface, on ascent and re-entry. This movement also “frees up cabin space to maximise an unrestricted astronaut float zone when in zero gravity,” the company said.

“At the pinnacle of the experience, as the Earth comes into view against the black sky of space, all lighting is extinguished, bringing an instant focus to the profoundly beautiful vista,” Virgin Galactic said.

The profundity, however, will be rather brief. Customers will experience 10-15 minutes of weightlessness during the 30-minute flight before the ship glides to a return in southern New Mexico.

But there will be champagne and hors d’oeuvre awaiting them when they return.

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Fly from $85: Virgin drops massive Qld sale



 

RALLYING after a turbulent 2020, Virgin Australia is celebrating Queensland borders reopening by releasing more than 500,000 sale fares, from $85.

In a much-needed boost to the state’s struggling tourism market, the Good to Go sale, in partnership with Tourism Events Queensland, is not only offering bargain fares to the Sunshine State from Sydney, Adelaide and Perth but also encouraging locals to travel, with cut-price flights to NSW and the Whitsundays.

Virgin finally receives some good news

Gold Coast airline price war looms

It’s a positive sign in a COVID-shattered market that has seen Virgin succumb to massive job losses and an uncertain future, with US investment giant Bain Capital only recently emerging as the Brisbane-based airline’s new owner after voluntary administration in April.

Virgin Australia chief commercial officer John Macleod said he hoped the sale would “help reboot the Queensland tourism industry” and encouraged travellers to “take holidays they’ve been dreaming about or to reunite them with family and friends”.

Economy class fare highlights (including 23kg baggage allowance):

Sydney to Gold Coast from $85

Sydney to Brisbane from $89

Brisbane to Newcastle from $89

Brisbane to Whitsunday Coast from $89

Brisbane to Sydney from $99

Brisbane to Hamilton Island from $115

Adelaide to Gold Coast from $129

Sydney to Cairns from $139

Sale fares are available to book at virginaustralia.com from July 10 until midnight July 14.

Originally published as Fly from $85: Virgin drops massive Qld sale





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Virgin Australia sale to Bain Capital in chaos as bondholders plan last-gasp bid


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Bondholders have asked the Takeovers Panel to review Deloitte’s conduct during the administration and also took court action access documents relating to the transaction so they could have more time to consider Bain’s offer and prepare their alternative proposal.

While bondholders have previously hinted at making a second offer, Friday’s court hearing was confirmation they would lob an alternative offer for creditors to vote on at the August meeting.

“My clients seek to bring an alternative DOCA at the creditors’ meeting. We have a right to do that,” said counsel for the bondholders Ian Jackman, SC.

Federal Court judge John Middleton dismissed the bondholders’ request after putting the administrator notice to share information with bondholders to avoid a legal battle.

“The administrators may have to make some rather hard decisions about how much they do disclose information for the purposes of the second creditors’ meeting. If they take a particular approach the second creditors’ meeting may become litigious,” Justice Middleton said.

“I’m just… warning is putting too fine a point on it I may say,” he said.

He said it was in “everyone’s interest” for as much communication as possible to flow between administrators and creditors as this would alleviate concerns and allow people to gather information to consider the options available.

Mr Jackman told the court his client had been confused by a public statement by Deloitte that the sale of Virgin was a done deal, given it now claimed Bain will also be putting forward a DOCA at the meeting.

“We are confused as to how the administrator, no doubt with advice, has come to the conclusion that it is a fait accompli and whatever happens at the second creditors’ meeting can’t change the asset sale to Bain.”



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Virgin bondholders claim Deloitte reneged on sale process


The bondholders have asked the Takeovers Panel to intervene so creditors can vote on their proposal at the second meeting of creditors in August, and launched court action this week to try to unseal the secret details of the Bain deal to inform their rival proposal.

Broad Peak’s submissions lodged with the Federal Court on Thursday afternoon – which revealed for the first time that it and Tor own $300 million of Virgin’s bonds – slam Deloitte for appearing to withhold from the court that bondholders wanted the deal documents when it requested a confidentiality order over them.

Obtaining the suppression order after “apparently withholding facts directly relevant to the court’s assessment”, only to then use that order to deny the Broad Peak access to information it needs to propose an alternative deal for Virgin “cannot be consistent with the interests of justice”, the submissions says.

Deloitte administrator Vaughan Strawbridge hit back at the bondholders’ court request, saying in an affidavit that if the court supported the bondholders’ claim it could lead to them shutting down the airline, possibly creating a worse outcome for creditors and putting Virgin’s workforce at risk.

However, Broad Peak’s submissions says that a June 19 Virgin cash flow statement disputes Deloitte’s claims that Virgin would have gone into liquidation if it had not have executed the snap sale to Bain.

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Broad Peak also claims it developed its proposal for Virgin after Deloitte had told it on June 8 it would give “feedback on all offers to enable the applicants to prepare a better offer”, and that while preferring a binding deal, would also consider any offer that delivered a better return to all creditors.

Deloitte changed its tune on June 20, Broad Peak claims, by telling Broad Peak it would not give feedback on its proposal. And on June 23, it told the bondholders for the first time they had to submit an unconditional proposal supported with an upfront payment of $625 million.

Broad Peak also says that Deloitte chose to sell Virgin’s assets to Bain before the second creditors’ meeting despite there being sufficient cash on hand to keep its lights on until that meeting, and did so without going to court to confirm it was appropriate, as an administrator would typically do.

Deloitte was aware, and has told the bondholders, that the Sale and Implementation Deed signed with Bain had the effect of blocking bondholders from putting their offer to creditors at the second creditors’ meeting, “in contravention of their statutory rights as creditors”.



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Court documents challenge ‘watertight’ Virgin sale to Bain


Deloitte’s administrators last week obtained an exemption from personal liability from the court for any debts taken on through a funding package from Bain to keep the airline operating until creditors can vote on the sale in August.

Deloitte’s administrators asked for the exemption to extend to “any obligations if the sale deed does not complete”, submissions made to the court on July 2 show.

Justice John Middleton agreed for Deloitte’s exemption to apply “upon the termination of the sale and implementation deed … due to the breach by, or failure” on the part of the administrators.

Deloitte also argued in its submissions that the details of the sale needed to remain confidential “due to the complexity of the transaction and the significant number of steps and conditions precedent that must be satisfied”.

Disclosing the details of the sale could cause “misapprehension or confusion on the part of creditors or other stakeholders as to the implications of the transaction”, Deloitte said.

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A spokesman for Deloitte said the court application was “largely procedural” and “not unusual in a case such as this”. He declined to comment on exactly how binding the agreement with Bain was.

“Needless to say, significant work will be done in administration to position the business for its future under new ownership,” he said.

On Monday it was revealed that two of the largest owners of Virgin’s $2 billion worth of unsecured bonds had applied to the Takeovers Panel to intervene in the sale to Bain. Hedge fund Broad Peak, which is backed by Singapore’s sovereign wealth fund Temasek, and Hong Kong firm Tor Investment Management argue the way Deloitte ran the administration was “unacceptable” and blocks them from presenting an alternative deal at the second creditors’ meeting in August.

The two investors are part of a group advised by boutique Sydney firm Faraday Associates and lawyers from Corrs Chambers Westgarth that proposed swapping its $2 billion in debt for ownership of Virgin. The group said it would pour $925 million into Virgin in a recapitalisation plan and keep the company listed on the Australian Securities Exchange.



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