Lead admininstrator Vaughan Strawbridge said that will be reduced down to about three final bidders in a shortlist.
He said the competitive tension was “what’s needed to drive the best outcome, an outcome that preserves as many jobs as possible, and the best result for all creditors”.
“Virgin Australia plays an incredibly important role in Australia’s aviation and tourism industry, employing thousands of people and bringing strong competition as Australia’s second airline. Our focus has been on ensuring we sell the business to a new buyer and we remain very confident we can bring Virgin Australia out of administration in a much better financial position,” Strawbridge said.
“Indications are strong that we will receive as many as eight indicative offers.
“We will then assess these over the next few days, working with the bidders to fully understand the details of their bids, enabling us to short list parties to participate in the next stage of the process. We expect to have a short list of around three.
Binding offers will be required by 12 June and Deloitte is committed to a resolution by the end of June.
“Up to now, we’ve certainly seen a high level of interest from a significant number of high quality parties, many of whom are capable of completing a transaction of this size and complexity. Nearly 20 have had access to the data room and eight of these have been sufficiently advanced in their interest, and in the business as a whole, that they have been provided with the forward-looking Virgin 2.0 business plan.”
The shortlisted bidders will be given access to more detailed business and operational information, management presentations and workshops as well as key stakeholder interactions from across all areas of the business, to allow them to prepare a definitive and binding proposal.
“We are pursuing an aggressive process, but it’s one we are confident we can achieve, and our objective remains to deliver a revitalized, viable, and profitable airline under new ownership,” he said.
The statement followed claimed by Treasurer Cameron Dick that the Morrison Government was undermining Virgin through its subsidy to Rex, a regional airline that is contemplating entry into the capital city routes.
He said Rex could threaten the value of the airline because of its potential to add to competition on the major routes between Brisbane, Sydney and Melbourne and it has been reported that the company has received almost $70 million from the Federal Government.
“Given the subsidy they are potentially undermining the value of Virgin on the capital city routes,” Dick said.
However, the states also fund Rex and Queensland subsidises the company on a handful of regional routes in the state which it recently had to renegotiate after Rex threatened to walk away.
The Sydney-based Rex will make a decision in about eight weeks and has said that if it does go ahead it will need to raise about $200 million in capital and will launch the service next March.
Economist Gene Tunny said it was understandable that the Government was concerned about what a collapse of Virgin could mean for our regional communities and tourism industry.
“That said, it would be a poor start to the Queensland Future Fund, which QIC is managing, and a bad result for Queensland taxpayers, if one of its major investments, of at least $200 million and very likely more, is in a struggling airline doomed to perpetual second place and continuing to lose money,” Tunny said.
“QIC would need to have a very high level of confidence the airline can be turned around.
“Virgin Australia would be a very risky investment for QIC.”
Dick said the Queensland Government, through its investment arm, QIC, has been engaging in the Virgin bid in a strategic way and was keeping its cards close to its chest. But he confirmed QIC had been in the data room investigating the numbers.
About 18 parties were engaging with Deloitte over bidding for Virgin and Dick said Queensland was not going to close off negotiations with anyone.
“Out of indicative bids you will get three to a dozen that will be fair dinkum. The people who are not fair dinkum will fall away,” Dick said.
“We are going to keep our cards close to our chest. We need to be canny, prudent and careful.”
But he said there was “a real risk” that other states could steal the company.
“Other states have expressed and interest. We know there is Victorian interests and we want to ensure that Queensland interests are protected.
“Another purchaser of the airline may not have an interest in in Queensland.
“We can’t control all the variables but standing back and not engaging won’t help Queensland. That’s why we have to stand up.”Jump to next article