News Administrator narrows down Virgin Australia shortlist to two US private equity firms

Administrator narrows down Virgin Australia shortlist to two US private equity firms

nsw travel covid
NSW government changes aim to make clear what happens if people need to cancel or defer travel. Photo: AP
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Bain Capital and Cyrus Capital Partners have been nominated by administrators Deloitte as the preferred bidders to acquire Virgin Australia.

Five non-binding indicative proposals were received on Friday, and Deloitte has culled the shortlist down to the two US private equity firms.

“Both Bain Capital and Cyrus Capital Partners are well funded, have deep aviation experience, and they see real value in the business and its future,” Deloitte administrator Vaughan Strawbridge said in a statement on Tuesday.

Mr Strawbridge said there would be speculation that the losing parties – believed to be Melbourne-based BGH Capital, Indigo Partners and Brookfield Asset Management – would partner with the remaining parties.

“That will, of course, be a matter for them,” Mr Strawbridge said.

He said it was still Deloitte’s intention to have a binding agreement to sell Virgin by June 30.

The nation’s second-largest carrier was placed into administration in April following the introduction of travel restrictions designed to curb the spread of the coronavirus.

But Virgin Australia had been struggling long before the pandemic grounded planes, posting annual losses for the past seven years (including a $35 million loss in 2019).

More than half of Virgin’s shareholders – Virgin Group (10 per cent), Etihad Airways (21 per cent) and Singapore Airlines (20 per cent) – are international travel firms who are also feeling the financial strain of border closures and restrictions on travel.

Virgin Group boss Richard Branson said he would be prepared to “put up between $200 million and $250 million” if the federal government chips in.

Whichever consortium wins the race will inherit a company with limited cash flow and roughly $5 billion in debt.

Virgin Australia temporarily stood down 8000 of its 10,000 permanent staff after it slashed domestic seats by 90 per cent in late March because of the coronavirus.