20 potential buyers for Virgin Australia; deal targeted by June

SYDNEY • Virgin Australia Holdings' administrators said yesterday that they had given eight potential buyers access to a data room and were negotiating with another 12 about doing so as they seek to sell the country's second-biggest airline by the end of next month.

In an update after a first meeting of creditors owed nearly A$7 billion (S$6.47 billion), administrators from Deloitte Australia said they had appointed Morgan Stanley to run the sales process alongside Houlihan Lokey.

Singapore Airlines, which owns 20 per cent of Virgin Australia, has said it has no loans to the airline.

The administrators were appointed last month to restructure and sell Virgin Australia, the Asia-Pacific airline industry's biggest victim of the coronavirus crisis so far.

The potential buyers that have signed non-disclosure agreements have received access to a data room, Deloitte said in a statement.

"In terms of next steps, mid-May is currently the timeframe for the receipt of indicative offers," administrator Vaughan Strawbridge said. "Binding offers will then be required in June. We remain confident that our target of achieving a sale by the end of June is achievable."

Private equity and distressed situation specialists Apollo Global Management, Oaktree Capital Management and BGH Capital are among the firms that have expressed interest in the purchase, Reuters has reported, citing five sources.

US-based airline investor group Indigo Partners is also looking at a possible deal, three sources familiar with the sales process said on condition of confidentiality. Indigo declined to comment.

Deloitte said it would seek court orders to extend by three months a May 22 deadline to hold a second meeting with creditors. Delaying it to Aug 22 would give it more time to investigate the company's affairs and find a buyer, it said.

Virgin Australia owes A$2.3 billion in secured debt to banks and aircraft financiers, A$2 billion to unsecured bondholders, A$1.9 billion to aircraft lessors, and A$450 million to employees. Trade creditors are also owed A$167 million and landlords are owed A$71 million, court documents show.

Mr Strawbridge said during the meeting that there probably were sufficient assets to cover employee entitlements, but that the administrators had put a moratorium on the coupon payments on the airline's unsecured bonds to preserve the company's cash balance, a creditor told Reuters.

For now, Virgin Australia is flying a skeleton schedule under its regular management team.

REUTERS