Virgin Blue co-founder among former execs advising bondholders

Bondholders have revealed the ‘dream team’ advising their audacious bid to derail the sale of Virgin Australia.

The brains behind budget airline Virgin Blue – Rob Sherrard and Brett Godfrey. Picture: Supplied

Bondholders have revealed the “dream team” behind their audacious bid to derail the sale of Virgin Australia to Bain Capital, which is now the subject of court action.

Five former Virgin Blue executives led by the airline’s co-founder Rob Sherrard have been providing specialist industry advice to bondholders Broad Peak Investment Advisers and Tor Investment Management.

The others include Virgin Blue founding executive Bruce Highfield, former chief financial officer Manny Gill, former network operations manager Andrew Lillyman and former public affairs executive Heather Jeffery.

Virgin Australia, which started as Virgin Blue in 2000, went into administration on April 21 with debts of $6.8bn including $2bn owed to more than 6000 bondholders, including 30 large financial institutions.

Broad Peak and Tor filed documents in the Federal Court on Tuesday seeking to have their proposal for Virgin considered by the airline’s administrators and put to creditors for a vote.

The application also sought orders to get information and access to stakeholders, that had been denied to them so far.

Mr Sherrard indicated the bondholders’ bid was not a disruption to the process but a deadly serious move to keep the airline as an ASX-listed company.

“In simple terms, we are proud investors and supporters of Virgin Australia and its people,” said Mr Sherrard.

“We believe in the airline, firmly support the vision of management and are confident that Virgin can return to being a successful airline.”

Virgin Blue co-founder Rob Sherrard. Picture: NIKKI DAVIS-JONES

He said under their plan, Virgin Australia would become a majority Australian-owned public company “as opposed to the asset of a privately-owned investment company based in the US”.

“We firmly believe our founders and bondholders proposal will result in the best return for all creditors and employees,” Mr Sherrard said.

“We also want to be very clear that we don’t want to run the airline. That is the job of the existing management team. We are focused on rebuilding our airline through a solid recapitalisation proposal.”

Documents before the federal court showed 13 institutions including UBS, Credit Suisse, Morgans and Deutsche Bank had backed the bondholders’ proposal, along with aircraft lessors.

“We are very keen to speak with employees and engage with the employee unions on the details of our proposal as soon as possible,” said Mr Sherrard.

“Currently under the terms of the Virgin Australia Administration, we have not been able to do so.”

Mr Sherrard and former Virgin Blue chief executive Brett Godfrey famously devised the initial concept of budget carrier Virgin Blue on the back of a beer coaster in London after becoming dismayed at the high cost of airfares in Australia compared to those in Europe.

The bondholders’ application will be heard by Federal Court Judge John Middleton on Monday, in a hearing that could disrupt the sale to Bain Capital.

The US private equity firm entered into a binding agreement to buy Virgin Australia on June 26 in a deal that saw the company takeover the financial responsibility for the carrier.

Deloitte and Bain Capital have both said the sale agreement did not allow other proposals to be considered or put to creditors for a vote at their next meeting in September.

In a strongly worded statement this week, a Bain spokesman said the bondholders’ proposal had no credibility and was not capable of progressing.