Sold: Rescuer buys Virgin Australia

·2-min read
Virgin Australia sold to Bain Capital. Source: Getty
Virgin Australia sold to Bain Capital. Source: Getty

Virgin Australia has been rescued by Bain Capital, with Deloitte administrators agreeing to sell the airline to the Boston-based private equity firm on Friday morning.

The sale and implementation deed is subject to minimal conditions, the administration team said on Friday, with the official purchase expected to occur before the end of August.

Deloitte said it does not expect any return to shareholders, and at this stage it isn't possible to estimate the return to Virgin's creditors, who are owed $7 billion.

The sale follows New York-based private equity firm Cyrus Capital’s dramatic walkout earlier on Friday.

"I am disappointed that it has become necessary to withdraw our offer,” chief investment officer Stephen Freidheim said.

Freidheim blamed a “lack of engagement by the administrator”, Deloitte.

"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," the statement said.

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

What is Bain Capital?

Bain Capital is a US private investment firm, which already owns Virgin Voyages, Virgin’s Florida-headquartered cruise line company.

The firm boasts around US$100 billion in assets under management, and was founded by US presidential candidate Mitt Romney.

Are the unions happy with the decision?

The Flight Attendants Association of Australia expressed support for Cyrus earlier in the bidding war, citing the company’s aviation experience made it a better suitor.

"This is not an experiment for Cyrus," union secretary Teri O’Toole told The AFR. "It felt like the others are just dipping their toes in the water."

Federal secretary of the Australian Licensed Aircraft Engineers Association, Steve Purvinas, also welcomed Cyrus’ bid, saying he sensed a “passion” about the Virgin brand.

But Bain Capital managing director Mike Murphy said the firm was “working constructively” with other unions to make sure it had the support of members.

“We understand the key issues and concerns,” he said. “It's not always possible to please absolutely every one of 15 stakeholders in a situation that is so delicate in saving this business from going into liquidation."

Unions are yet to comment on Friday’s sale.

Yahoo Finance Breakfast Club episode 7.
Yahoo Finance Breakfast Club episode 7.

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