Bain Capital becomes new Virgin Australia owner after Cyrus Capital withdraws bid

Treasurer Cameron Dick says Virgin is likely to stay in Queensland following today’s announcement that Bain Capital had been selected as the new owners of the airline.

QUEENSLAND Treasurer Cameron Dick says Virgin is ready for takeoff following today’s announcement that Bain Capital had been selected as the new owners of the Queensland carrier.

Bain Capital, an American private investment giant, was revealed as the winner this morning just hours after rival bidder Cyrus Capital announced its shock withdrawal.

The sale will be completed after the second meeting of creditors, which is scheduled for the end of August.

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Mr Dick said the company wanted to keep the airline in Queensland, and pointed to the work of the state’s investment arm for achieving this.

“It means when Virgin flys again, it will fly from Queensland,” he said.

“We are so pleased that the Queensland maroons have beaten the NSW blues again.”

However, Mr Dick stressed the transaction still needed to be completed and that Virgin could be a “different airline” or a “smaller airline” when the transaction is finalised.

Bain Capital is set to become the new owner of Virgin Australia. Picture: Patrick Hamilton

“But this is the best possible deal we could get to secure as many jobs as possible for Queensland,” he said.

“This is a great day for Queensland and a great day for Virgin.

“We’ve now got a firm buyer for Virgin Airlines. And that means when Virgin flies again, it will fly from Queensland. We haven’t taken off yet, but we are at the end of the runway and we are ready for take off.”

Mr Dick described Virgin as the “national carrier of Queensland” and said the State Government wanted to keep it that way.

A creditors meeting will happen in August, which Mr Dick said would be an important step to finish the transaction.

The Treasurer said the Government would be looking to take an equity stake and provide other incentives to ensure Virgin remains in the state.

“So that’s what we’re working on at the moment,” Mr Dick said. “That’s been very attractive to all of the bidders I might say, not just Bain.”

Mr Dick said they had not hidden the fact that the Government has already committed up to $200 million.

Treasurer Cameron Dick described today’s announcement as “the best possible deal”. Picture: Steve Pohlner

KEY SALE POINTS

– The sale supports the current management team led by Paul Scurrah and their improvement plan for the airline

– Retains thousands of jobs, but how many will go is unclear

– Honours all travel credits and Velocity frequent flyer booked flights and employee entitlements

– Provides a significant injection of capital to see the business recapitalised and positioned for the future.

Deloitte Administrator Vaughan Strawbridge said the sale was an “important milestone and a significant achievement” for the airline.

“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,” he said.

“The Virgin Australia Group entered administration as a direct result of an unprecedented global pandemic which all but grounded its operations while in the midst of a major transformation of the business led by Paul Scurrah and the management team.”

A return to shareholders has not been determined.

It comes after Cyrus Capital said this morning it would pull out of the sale “due to lack of engagement” by Virgin Australia administrator Deloitte.

Virgin Australia Group Chief Executive Officer Paul Scurrah. Picture: Joel Carrett

Bain Capital’s Australian-based Managing Director Mike Murphy said Virgin would return to its “core strengths” and re-establish itself “as an iconic Australian airline”.

“Our investment and plan for the airline will support and celebrate Virgin Australia’s unique culture and protect as many jobs as possible for the short and medium term in a way that will

make significant jobs growth possible,” he said.

“We appreciate how difficult the current situation is for Virgin Australia staff.

“They are the essence of the business, and we thank them for their perseverance through this challenging period.

Bain Capital has pledged to strengthen Virgin’s regional services and focus on offering low-cost services while also servicing business travellers.

New York-based Cyrus Capital said that after submitting a final bid for the airline on Monday, “administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer”.

Another “unsolicited package” of value improvements to increase the value of the transaction was handed to the administrators on Thursday morning.

“This too received no response other than an acknowledgment of receipt,” a Cyrus spokesman said.

Cyrus Founder Stephen Freidheim was “disappointed that it has become necessary to withdraw our offer” but said it was willing to renegotiate.

“Cyrus firmly believes that the Australian aviation industry has a bright future and would be willing to reinstate our offer if the Administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders – employees, customers, Velocity members and bondholders,” he said.

Originally published as Bain Capital becomes new Virgin Australia owner after Cyrus Capital withdraws bid