MIAMI – Virgin Australia (VA), the country’s second-largest airline, seems set to be sold to Bain Capital. The American private equity firm became the last bidder standing when rival Cyrus Capital Partners withdrew its offer.
The carrier has been struggling for several months now due to the fallout of the COVID-19 pandemic shaking the aviation industry. VA filed for administration back in April, and was able to receive five buyout bids.
Cyrus Bid Turns Sour
Bain and Cyrus were chosen as the final two bidders at the beginning of June. Cyrus has previously worked with the Virgin franchise, being a founding investor in Virgin America alongside Richard Branson.
However, the firm withdrew its bid for the Australian branch, citing a complete lack of engagement from VA’s administrator Deloitte, saying that the “administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer.”
Cyrus did however include in its statement that it thinks highly of the Australian aviation industry and would be willing to reinstate its rescue bid on the airline if Deloitte begins to cooperate more willingly.
A Bright Future with Bain
With Cyrus out of the running, Deloitte has agreed to sell VA to Bain Capital. Pending approval, which includes an August creditor vote, the airline will be sold and recapitalized.
The administration said that “Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia’s second airline, thousands of employees and their families, and ensure Australia continues to enjoy the benefits of a competitive aviation sector.”
However, the sale could potentially be disrupted by VA’s bondholders $1bn plan to pump in new cash and recapitalize the airline themselves.
Deloitte will make a final decision between the bondholders’ offer and that by Bain Capital at an upcoming meeting, according to an insolvency expert involved with the deal.