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Business deals

Virgin Australia administrator expects 19 bidders

Temasek and Bain Capital among the potential buyers of the coronavirus casualty

Virgin Australia, which in April said it owes creditors nearly 7 billion Australian dollars, is receiving "a high level of interest from a number of high-quality" potential buyers.   © AP

SYDNEY -- Nineteen companies and investment funds in Australia and overseas are expected to meet a Friday deadline to submit non-binding indicative offers for Virgin Australia Holdings, which in April became the first Asia-Pacific airline to succumb to the coronavirus pandemic and enter bankruptcy proceedings.

"We've seen a high level of interest from a number of high-quality parties and discussions with them are progressing very well," Deloitte, the airline's administrator, said in a statement on Wednesday. "We will then work even more closely with the parties we choose to take to the next stage that will allow them to prepare binding offers by 12 June."

The country's second-largest airline on April 21 announced it had entered voluntary administration, an equivalent to Chapter 11 bankruptcy in the U.S., owing creditors nearly 7 billion Australian dollars ($4.5 billion).

Deloitte aims to agree to a deal with a buyer by the end of June.

The Australian government has earlier suggested it will not provide support to a specific company. Michael McCormack, deputy prime minister and minister for infrastructure, transport and regional development, hinted he would leave the reconstruction of Virgin Australia to the private sector. "We will engage constructively with Virgin Australia's administrator to ensure Australia maintains two commercially viable airlines," he said.

The 19 potential buyers are expected to submit indicative offers, according to a person familiar with the matter who asked to remain anonymous.

Reuters reported that as of Monday the 19 parties had signed confidentiality agreements with Deloitte to conduct due diligence on Virgin Australia. Potential buyers include U.S. private equity funds Apollo Global Management and Oaktree Capital Management, according to Reuters.

Local media also reported that Singaporean sovereign wealth fund Temasek Holdings and U.S. private equity firm Bain Capital have expressed interest in the airline.

Temasek could partner with an Australian fund to make an offer. Singapore Airlines, partially owned by Temasek, has a nearly 20% stake in Virgin Australia. Bain Capital has reportedly signed an agreement with a leading law firm to make an acquisition offer.

According to data released last September, EAG Investment Holding, an investment vehicle for Etihad Airways, Singapore Airlines as well as China's Nanshan Group and HNA Group each have a nearly 20% stake in Virgin Australia.

Virgin Group, the parent company owned by British entrepreneur Richard Branson, has about a 10% stake in Virgin Australia.

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