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Only one contender remains in the fight to buy Virgin Australia, after Cyrus Capital Partners bows out

Jack Derwin
·3-min read
  • Bain Capital has emerged as the presumptive preferred buyer of Virgin Australia after its last competitor Cyrus Capital Partners pulled out of the race.

  • In a statement, Cyrus accused administrators of locking it out of negotiations, saying Deloitte had "not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer."

  • It appears to seal Bain as the one to bring the heavily indebted airline out of administration.

  • Visit Business Insider Australia's homepage for more stories.

In a remarkable turn of events, the short-odds contender in the two-horse race for Virgin Australia has dropped out entirely.

Cyrus Capital Partners has pulled the plug on its bid to buy the airline, claiming the Deloitte administrators in charge of the bid had grown cold on it.

"On the morning of 22 June 2020, Cyrus presented to the administrators of Virgin Australia Holdings an offer to acquire the airline, its regional business and the frequent flyer program Velocity, in accordance with the administrators' procedures," Cyrus Capital Partners said in a statement issued to media.

"However, since then, the administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer."

Had the cold shoulder treatment been a negotiating tactic it would certainly have worked. According to Cyrus, it had responded by bolstering its offer late this week with a range of "value improvements... [and] other compelling measures" in an effort to sweet talk the administrators.

However, it appears it did little to win over the team from Deloitte, with the administrators led by Vaughan Strawbridge, appearing to have already settled on the last horse in the race, Bain Capital.

The shock withdrawal comes after speculation earlier this week that Cyrus, with a long-standing relationship with Virgin's parent company and founder Richard Branson, had its nose ahead.

Additionally, Bain's decision to bring on former Jetstar CEO Jayne Hrdlicka been characterised by some as a misstep. Deloitte's preferred bidder will, after all, need to be approved by a large contingent of Virgin's 9,000 employees if it is to get over the line. An association with Jetstar and Qantas' industrial relations strategy wasn't thought to be a good start on that front.

Perhaps sensing this, Bain had redoubled its efforts to win over workers.

"Bain Capital [would] cover all employee entitlements, protect as many jobs at Virgin Australia as possible, implement a support program for employees impacted by COVID, [and] develop a broad based employee equity participation program," managing director Mike Murphy told Business Insider Australia this week.

While neither party's strategy had differed greatly in terms of where Virgin 2.0 would be positioned in the market, it appears Bain's latest charm offensive has worked.

Then again, it could all be just another negotiating tactic in this ever-evolving game of cat and mouse.

Cyrus founder Stephen Freidheim ended the statement with this tantalising morsel.

"Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to re-instate our offer if the administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders — employees, customers, Velocity members and bondholders."

The game could still be afoot.