Singapore's Broad Peak and Hong Kong's Tor Investment Management, who between them hold approximately AU$300 of Virgin Australia's AU$2 billion of unsecured bonds, have withdrawn plans for recapitalization of the struggling airline, leaving Bain Capital with an unobstructed path for its own recapitalization plans.
The withdrawal comes after a court ruling last week which would make it impossible to complete the necessary due diligence and also a predominantly unconditional DACA proposal that would challenge that of Bain Capital at the September 4 creditors' meeting, according to the two bondholders.
Currently, Virgin Australia is in voluntary administration, the Australian ‘equivalent' to U.S. Chapter 11 bankruptcy protection deployed to enable company restructuring. Deloitte, the bankruptcy administrator, will be issuing a creditor's report on August 25 which will outline what return they might expect to receive if the Bain capital recapitalization is successful.
“After the release of the administrator's report, we reserve our rights to take whatever action is necessary to protect our interests as creditors,” the bondholders' spokesman said. According to Reuters news agency, the bondholders have said their DOCA would allow for the conversion of noteholders' and certain other unsecured creditors' debts into equity worth around 69 cents on the dollar, with an option for creditors to sell their shares for cash. (US$1.00 = AU$1.40 at time of publication.)
