Vestal Virgin poking the dying embers for backing or buyers

If Virgin wants to emerge with some government help it will have to offer Canberra some cover. Picture: AFP

Hold the front page! Canberra says there are alternate buyers for Virgin, which just happens to be what Canberra wanted in the first place.

Just how this game plays out is anyone’s guess, but we can expect plenty of misinformation put out there by vested interests.

The Prime Minister Scott Morrison, according to former PM Malcolm Turnbull is a master of press briefings.

Canberra has played itself into a corner, which means if Virgin wants to emerge with some government help it will have to offer Canberra some cover.

The concept of a global airline buying Virgin today is a long shot unless it happens to be a Chinese government-backed entity.

Nanshan Group and conglomerate HNA are already in control of virtually 40 per cent and both reside in China.

All the US carriers are in various stages of selling themselves in part to the US government led by Qantas’s mates at American Airlines.

Just as Singapore with a wad of fresh cash from its government is not rushing in, we can expect the US carriers to be reluctant.

Private equity means more debt, which is probably not in the government’s play book, given the airline already has $5bn in debt in its book.

The name mentioned most often is Ben Gray, a principal at BGH Capital and a long-time staffer at private equity firm TPG, which was involved in the failed management buyout of Qantas in 2007.

TPG and its founders, Jim Coulter and David Bonderman, made their names by buying Continental Airlines out of bankruptcy in 1993.

That just happened to be the same year Qantas received a $1.35bn cash injection from Canberra.

That figure rings a bell because it is the same amount of money Virgin’s Paul Scurrah wants from Canberra.

Virgin CEO Paul Scurrah. Picture: Glenn Hunt

The debt alternatives for Virgin are either a scheme of arrangement or voluntary administration.

The latter would effectively hand the keys to an administrator who may or may not work with management but the board would lose control.

That is why the board favours a scheme of arrangement.

That’s tricky because it requires approval from 75 per cent by value and 50 per cent by number and when the two camps are split, the norm is to be swayed by value.

Virgin’s 9000 staff would swamp the other creditors, but the US bond holders would win on value.

The balls are in the air and you can take your own guess as to just where they might land.