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Virgin bidder's furious last-minute withdrawal over 'lack of engagement'

Business

US hedge fund Cyrus Capital has withdrawn its bid for Virgin leaving Bain as the likely winners for the Queensland company.

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The withdrawal came with a slap for administrators Deloitte with Cyrus stating its decision was because of a “lack of engagement by the administrator”.

Another bid has been lodged by bondholders but Deloitte’s Vaughan Strawbridge has yet to make any comment on it.

Cyrus said it had invested thousands of hours of detailed due diligence, business planning and stakeholder engagement.

“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.

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

“On the morning of 25 June 2020, Cyrus submitted a further unsolicited package of value improvements and other compelling measures to increase the value of the transaction, improve the return to unsecured bondholders and deliver more certainty for the administrators.

“This too received no response other than an acknowledgement of receipt.

“Despite the material improvements put forward, the administrators have still not engaged with Cyrus on its offer.”

Industry commentator Geoff Thomas from Airline Ratings said the Cyrus’ actions could be seen as a strategic withdrawal from a race it knew it wasn’t going to win.

“I think it’s extraordinary and totally out of left field,” Thomas said.

“Cyrus was considered to be the front runner. They have worked extensively with Virgin in the US and the UK and they were married to the Virgin strategy and management.

“For them to do this is perplexing.”

The decision comes as Qantas’ investors benefitted from a share price surge.

The airline raised $1.36 billion from investors on Wednesdsy at $3.65 and its shares have jumped to $4.19.

 

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