Virgin Australia’s board wiped clean with resignations
Virgin Australia’s board of directors will be replaced as the airline’s sale to Bain Capital nears completion.
Virgin Australia’s board of directors has been wiped clean as the airline’s sale to Bain Capital nears completion.
A statement to the ASX by administrators Deloitte advised that chairman Elizabeth Bryan, and directors Kenneth Dean, Judith Swales, Trevor Bourne, Marvin Tan and Sir Angus Houston had resigned, effective from October 20.
Three other directors — Raymond Gammell, Hou Wei and Kevin Xing — had not lodged formal resignations but would cease to hold office after administrators exercised their powers to replace them.
CEO Paul Scurrah, Virgin Group representative Warwick Negus and the administrators’ pick, Alan Hunt, would continue as directors until the completion of the sale next month.
Deloitte also told the ASX of its court application seeking the transfer of all shares in Virgin Australia to Bain Capital, as a condition of the $3.5bn sale.
The notice was accompanied by a 700-page independent expert’s report that found the value of the equity in Virgin Australia was nil.
FTI Consulting reached that conclusion after determining the value of Virgin Australia’s operational businesses, including the Velocity program and deducting secured and unsecured borrowings, lease obligations and other liabilities, such as the claims of bondholders.
Prior to administration, Virgin Australia shares traded at 8.6c, which valued the company at $731m.
Despite the report detailing why those shares were now worthless, Deloitte invited any shareholders who wished to oppose the transfer of shares to Bain to appear at a Federal Court hearing on November 10.
They would first be required to lodge a notice of appearance by November 5, indicating their grounds of opposition, said the statement by Deloitte.
The administrators are seeking to complete the sale before November 30, after which the transaction would revert to an “asset sale” or liquidation, which could take many months and reduce the return to creditors.
Virgin Australia’s board appointed administrators on April 20 after accumulating debts of $7.1bn and facing the prospect of little or no revenue for months.
More than a dozen companies expressed interest in the airline, with the numbers eventually reduced to two — Bain Capital and Cyrus.
After a four-week process, Cyrus made the last minute decision to withdraw its bid, leaving Bain as the winner.
The Boston-based firm promised to use its wealth and extensive research arm to turn Virgin Australia around, with a reduced fleet and workforce.
Australian managing director Mike Murphy pledged his commitment to retaining Mr Scurrah and his management team, but last week it was announced Mr Scurrah would be replaced with former Jetstar boss Jayne Hrdlicka. She will take over once the transaction is completed, with Mr Scurrah to exit the airline, after just over 18 months in the job.
Under Bain, Virgin Australia is expected to become a “hybrid” airline with a focus on ancillary revenue.
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