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Virgin narrows its shortlist down to 4 suitors

The process of Virgin Holdings Australia Ltd (ASX: VAH) re-emerging from voluntary administration continues to unfold, with the company announcing it has shortlisted a small number of “well-funded parties with strong aviation credentials”.

While Virgin refrained from naming the parties due to confidentiality reasons, ABC News reports that the shortlist comprises 4 bidders: private equity firms Bain Capital and BGH Capital, US aviation firm Indigo Partners, and New York-based investor Cyrus Capital Partners.

BGH Capital is an Australian and New Zealand-focused private equity firm that is headquartered in Melbourne. Just this morning, details emerged of its revised takeover proposal for entertainment company Village Roadshow Ltd (ASX: VRL).

“Significant step forward”

Virgin described the shortlisting as a significant step forward in the process to find a new owner and bring the airline out of administration as soon as possible.

The deadline for indicative bids was last Friday 15 May, with 8 non-binding offers received and negotiations ongoing with a further 12 parties as of Thursday.

According to Reuters, other parties that put in non-binding indicative offers include Canadian asset manager Brookfield, India’s InterGlobe Enterprises and Australian mining tycoon Andrew “Twiggy” Forrest. The Queensland government also made a surprise bid.

Commenting on the shortlist, lead partner for the administrators, Deloitte’s Vaughan Strawbridge, said:

These parties enable us to seek the best available commercial solution which we are all looking for, while meeting our responsibility to maximise the outcome for creditors and see the airline continue as one of the country’s two carriers serving Australians across cities and regions.

What next?

The embattled airline entered voluntary administration on 21 April, owing around $7 billion to thousands of creditors.

Virgin and its administrators will now work with these shortlisted parties over the next 4 weeks to enable binding offers by mid-June. This will involve the sharing of more detailed financial information, management workshops, and meetings with various stakeholders including financiers, landlords, suppliers and unions.

According to the ABC News report, final bids are due on 12 June 2020.

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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