Bond holder prepared to take loss from Virgin Australia on the chin

Sydney retiree Bob Allison, said he was “disappointed” to learn he would be losing most of his investment in the airline.

Retired couple Bob and Helena Allison. Picture: Jane Dempster/The Australian.

Virgin bond holder, Sydney retiree Bob Allison, said he was “disappointed” to learn he would be losing most of his investment in the airline but had been resigned to the fact for some time.

Virgin’s $1.9bn unsecured bond holders learned officially on Tuesday they would only get from 9c to 13c in the dollar in a report from administrator Vaughan Strawbridge.

Mr Allison, who invested in Virgin bonds issued in early 2018, and again through a bond specialist fund manager when Virgin did another $325m debenture issue last November, said he was shocked in late April when he heard Virgin had gone into administration.

But he said that as the sale process had continued, he had reduced his hopes of getting much out of the deal.

“I have been expecting that we might get around 10c in the dollar for some time,” he told The Australian.

Mr Allison said he never thought a proposal put by Virgin bond holders to the administrator would be accepted.

“I really didn’t think the proposal by the bond holders from Singapore and Hong Kong to try to take an equity position in Virgin was going to fly,” he said.

“I didn’t pin my hopes on that.

“I am not surprised that nothing came of it.”

Mr Allison said he was disappointed the federal government was not able to provide more support for Virgin, particularly given its support for regional airline Rex.

He said he also felt that Virgin bondholders should have had more access earlier on to the data room operating by the administrator, which was made available to potential buyers of the airline.

He said he would vote in favour of the proposal to be put to Virgin creditors on September 4 in support of the takeover offer by Bain Capital rather than rejecting it, which would put the airline into liquidation.

Mr Allison said while he was not happy to lose money as a result of his Virgin investment, he felt there were a lot of other people who had also lost money as a result of the COVID-19 pandemic.

“You just have to live with it,” he said.

“A lot of people have had a lot of adverse financial things happen to them because of COVID.

“It’s disappointing, but if this is the worst that happens as a result of COVID, I can live with it. You just have to take it on the chin and move on.”

Mr Allison and wife Helena are among some 6500 small bondholders who now know they will have most of their investments in Virgin wiped out.

The administrator’s report says investors in some $1.9bn in unsecured bonds will only get back between 9c and 13c in the dollar if creditors approve the Strawbridge plan next week. If they reject the offer, Mr Strawbridge estimates significantly less.

Mr Allison began investing in bonds as interest fell on bank term deposits and he also became sceptical about the future of the share market.

He said he bought bonds in Virgin because it was a reputable company with a well-known name.

“I thought buying Virgin bonds was a lot less risky than investing in bonds of lesser known comp­anies,” he said.