Terry McCrann: Virgin administrator says sale is sealed so why the secrecy?
Virgin Australia’s administrator has let slip in court that the airline’s sale is a done deal and can’t be undone. So it beggars belief he won’t reveal the details, writes Terry McCrann.
Terry McCrann
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The administrator of the collapsed Virgin Australia 1.0 — Deloitte’s Vaughan Strawbridge — has personally blown out of the water any justification for his own obsessive secrecy over the terms of his sale of the rump of the airline to the main-chancing group led by vulture investor Bain Capital.
For the first time as far as I can see, Strawbridge has gone explicitly on the record to say the sale was a “done deal” in the purest meaning of that term. That is to say, it simply could not be undone or changed.
It was “signed” and now just had to be “sealed and delivered” through what were purely symbolic processes.
Thus what he is going to “offer” Virgin creditors at the meeting next month, called to supposedly “approve” his deal with Bain, was even more literally an “offer that could not be refused” than the ones of proverbial gangster yore.
On Monday the Federal Court was told by counsel representing Strawbridge and his fellow administrators that any other proposal for Virgin’s future was futile because a sale has already taken place.
If so, why the refusal by Strawbridge to put on the public record what the terms of that sale are? It’s a done deal; it can’t be changed — unless both “sides” agreed, just like every signed sale of a property — nobody else can butt in?
So why the refusal to make it public? Especially when hundreds of millions of dollars of taxpayer money — $200 million from Queensland and at least that federally — are being fed into the process?
Deloitte was in court to oppose the attempt by a group of dissident Virgin bondholders to get the right to put a competing proposal at the creditors’ meeting on September 4.
The formal disclosure by Deloitte’s counsel that it would be futile came in response to that.
Creditors are going to vote on a “deed of company arrangement” (DOCA). But if they reject it, all the relevant assets of Virgin 1.0 will then be sold — in effect, have already been sold — to Bain, Counsel told the court.
So creditors quite literally cannot reject the transfer of the airline to Bain. Virgin 1.0 is dead; long live Bain’s (and only Bain’s) Virgin 2.0.
Deloitte has continually refused point blank to disclose the terms of either transaction. It has only said that the return to creditors under the direct asset sale would be significantly less than under the DOCA.
An interesting question not addressed, is whether they would also be significantly less for Bain as it lost the Virgin 1.0 corporate structure and assets such as tax losses.
It really has been a bizarre exercise of two putative partners of Virgin “dancing in the dark”, both refusing to reveal themselves and their offers.
Why on earth Deloitte has refused to disclose the details of a deal that is done is beyond comprehension — other than of course that Bain does not want them to.
Vulture investors like secrecy; they’ve learned from long and greedy experience that’s the best way of turning excess profits into obscenely excess profits.
The always dubious proposal from the dissident bondholders has been similarly totally clouded in secrecy.
That is, apart from vague and beyond dubious claims that $800 million of very, indeed utterly hilarious “funny money” would be pumped into Virgin 2.0 and the “return” to some creditors would leap to an (literally) amazing 67c in the dollar.
There was a bit of monumental light relief on Monday when the counsel for the administrators told the court that the bondholders’ proposal was “only being made to secure them a better return”.
No! You have got to be kidding. All my illusions, my beliefs in a better world driven by philanthropy, have been brought into question.
There I was thinking the bondholders were “in it” purely for charitable ends.
Next, you’ll be telling me that Bain is only “in it” for the money too.
And after that, what? That even the original vultures aren’t just selfless natural greenies — flapping their wings off just to keep the environment clean, tidy and litter free.
JB HI-FI SHOOTS OUT THE LIGHTS
Kogan is our downunder version of Amazon but JB Hi-Fi is a stunningly successful Version 2.0 of … JB Hi-Fi.
The past six months was custom “made” by the government-mandated national lockdown for a pure online retailer like Kogan — with Victoria’s utterly
inept Andrews Labor government doing its “best” to keep “making it”, at least for the one quarter of Kogan’s market that is Victoria.
The six months was most decidedly not made for JB.
Over the past 20 years it — and Bunnings — have been the two outstanding retailers in Australia.
But they both built their success on (figuratively) bricks-and-mortar retail, not online.
Coming into the lockdown, JB still generated close to 95 per cent of its sales in face-to-face contact in stores.
It was already also right in the middle of remaking itself into JB Version 2.0 with the acquisition of The Good Guys. Suddenly in March it had to also face the disaster of the mandated lockdowns.
It has had to juggle all the issues of face-to-face retailing, store closures — now, again in Victoria and in Auckland — rents, and boosting and servicing online.
It has come through all this with some stunning numbers.
The big clue to where it now stood were its July numbers: sales up 44 per cent on the reopening.
Originally published as Terry McCrann: Virgin administrator says sale is sealed so why the secrecy?