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Last-second bid would see Virgin recapitalised, remain listed on ASX


Virgin’s bondholders have emerged from the shadows to lob a late offer for Virgin.

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The 6000 bondholders, which includes retail investors and corporates, stand to lose about $2 billion in the collapse but today handed Virgin’s administrators Deloitte, a plan to recapitalise the company and continue to list it on the ASX.

The debt would convert into shares under the scheme and according to reports in the AFR, would mean the company would have a market capitalisation of $1.4 billion, giving the bondholders a return of about 70 cents in the dollar.

Under the shortlisted offers from Bain and Cyrus there is no confirmation the bondholders would receive anything. The two companies made the final bids on Monday.

Deloitte is yet to confirm whether it will consider the offer.

It is understood the recapitalisation proposal would also include them injecting $1 billion in fresh funds into the airline, to help it re-start post the COVID-19 pandemic.

It would relist with a lot less debt and nearly $1 billion cash on day one – and should it need further funds after that, it could explore the same sort of options Qantas Airways or another listed airline would.

The recapitalisation would also deliver Virgin’s bondholders and other unsecured creditors approximately 70¢ cents in the dollar, or close to $1 billion.

The plan guarantees full employee entitlements, honours all travel credits provided by the administrator, supports the Velocity frequent flyer scheme being retained and enhanced, backs the airline remaining located in Brisbane and will provide interim funding for the administrators of $125 million through to the creditors’ meeting in August

The bondholders are advised by Faraday Associates and Corrs Chambers Westgarth.

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