Virgin Australia bondholders belting it out with administrator

The bondholders are unsecured creditors owed $2bn and are arguing that could be converted into equity.

Virgin Australia plane departing from Brisbane Airport Picture: David Clark Photography

The Virgin bondholders are meeting with administrator Vaughan Strawbridge this afternoon in the lead up to Monday’s deadline for bids for the airline.

The bondholders are unsecured creditors owed $2bn and are arguing that could be converted into equity.

There are 6000 retail investors who have their money invested in the bonds and around 30 global institutions with about $11 trillion under management.

The bondholders claim that while the bonds are trading at 10c in the dollar this does not mean they are worth just 10c because anyone buying the bonds would expect to sell them for more money.

The bondholders are seen to rank as outsiders against Bain and Cyrus but the fact they have a vote on the August 22 creditors meeting means they are key players.

The meeting comes after the government directed the ACCC to monitor the local aviation industry for three years to ensure it remains competitive.

This was seen as a public relations stunt because the ACCC’s day job is to ensure industries remain competitive.

But with Virgin on its knees the government wants to be seen to be doing something.