Bain Capital will only hand over $700m in cash for control of Virgin Australia, well short of the $3.5bn price tag floated on the back of the second creditors report.
The actual cash being handed over is just a little short of the $726.3m equity value of the company when it called in Deloitte as the administrator in April.
Debt at the time was $6.8bn.
Separately chief customer officer Danielle Keighery will resign from the airline to take up the role as chief customer officer for BOQ based in Sydney
Bain won’t refinance the company until after receiving formal clearance at the creditors meeting on Friday week but while taking on responsibility for the liabilities actual cash changing hands is just $447m to cover unsecured creditors with another $125m available for a profit share with the unsecured creditors.
Unsecured bond holders will get between 9c and 13c in the dollar which compares to the 10c price of the bonds when the company called in Deloitte on April 21.
Public company takeovers typically see shareholders receive a premium of around 25 per cent on the last share price but in this case Bain is picking up the pieces at closing prices.
It has already injected $125m to keep the place afloat.
The company has received $49.3m in JobKeeper payments from the federal government plus around $1.2bn in subsidised flights during the pandemic according to the note to creditors.
Deloitte’s fees will total $26.8m, Clayton Utz and other legal costs will be $8.7m and Morgan Stanley and Houlihan Lokey will collect $16m in fees for advisory work.
Bain is taking on the risk of the airline actually making it through the pandemic but will enjoy the upside if it does.
In the past two months, it has worked with management led by Paul Scurrah, Deloitte and Korda Mentha to restructure the airline with the deals aimed at cutting the $6.8bn in debt.
A better idea on the path to the future will come when Bain files the papers for the debt issues to come.
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