Virgin sale: Andrew Forrest among 20 suitors as June sale set

Manoeuvring for Virgin Australia has intensified with 20 parties showing interest — including iron ore billionaire Andrew Forrest.

Virgin Australia CEO Paul Scurrah and administrator Vaughan Strawbridge of Deloitte. Picture: John Feder

Manoeuvring for embattled Virgin Australia has intensified with 20 parties now showing interest — including iron ore billionaire Andrew Forrest — and a firm deadline of June 30 set for a sale.

The first creditors’ meeting since the airline went into voluntary administration with debts of$6.8bn heard that eight parties had signed nondisclosure agreements, giving them access to the data room.

Another 12 were continuing to negotiate with administrator Deloitte, which has sought indicative offers in the next two weeks.

Vaughan Strawbridge of Deloitte said he was encouraged by the level of sophisticated party interest in the sale of Virgin Australia but would not reveal any names.

“In terms of next steps, mid-May is the time frame for the receipt of indicative offers,” Mr Strawbridge said.

“Binding offers will then be required in June. We remain confident that our target of achieving a sale by the end of June is achievable.”

His comments came as Mr Forrest reportedly entered the fray of interested parties, hours after he called for the Australian government to take a more conciliatory approach to China.

In a bizarre stunt, Mr Forrest invited a Chinese diplomat to speak at a press conference alongside Greg Hunt on Wednesday, catching the Health Minister off-guard and embarrassing him.

The timing of the stunt followed by the reported interest in Virgin, prompted some aviation industry insiders to question whether Mr Forrest was acting on behalf of Chinese investors keen to buy into the Australian carrier.

It was also suggested Virgin co-founder Richard Branson could be involved, given his friendship with Mr Forrest.

In 2012 the two billionaires teamed up for a campaign to eradicate forced labour and last year, Mr Branson tweeted support for Mr Forrest’s plan to end plastic waste, to his 12.7 million followers.

A spokesman for Mr Forrest’s investment group Minderoo would not comment on the reports.

Private equity firm BHG Capital, distressed securities investor Oaktree, US-based airline investor Indigo Partners, the Singapore government’s investment arm Temasek, Wesfarmers and Macquarie are also believed to be contenders for Virgin.

About 1300 creditors and their representatives attended the creditors’ meeting held electronically due to the coronavirus-related ban on large indoor gatherings. Those who took part described the meeting as “peculiar” with few opportunities to question the administrators.

ACTU national president Michele O’Neil said it was a “good thing” there appeared to be many interested parties, but urged the federal government to show its hand and support the airline.

“We want the very best possible outcome so that’s going to be a buyer with an eye on the long term,” Ms O’Neil said. “We’re not interested in someone buying the business who wants to break it up and sell off the assets or turn it into a shell of its former self in terms of the number of employees and routes that it flies.

“You would hope the government wanted to see the same thing, but their objective is really unclear because bizarrely they say ‘leave it to the market’ when it’s the very market they’ve intervened to shut down.”

The ACTU, along with several other unions, sought a place on the administrators’ committee of inspection, which represents creditors and plays an advisory role in the process.

Brisbane-based Alliance Airlines, which is owed hundreds of thousands of dollars by Virgin, also nominated for a spot in the hope of providing the benefit of their aviation experience.

Managing director Scott McMillan said he was keen to see how the administration played out. “There’s a lot of people expressing interest, but talk is cheap,” Mr McMillan said.

“The real action will happen in a month’s time when people are going to have to put money down to do their business modelling. I think you’ll see a lot of people fall away.”

He said Alliance was not interested in a buyout or expanding to take Virgin Australia’s place as the country’s second major carrier, should it not be recapitalised.

“Alliance has a very good national business and we’ve survived a lot over the years,” he said. “Aviation is a difficult industry but we’re very good at it, we’re here and we’re still going.”

Deloitte will seek a court order to postpone the next creditors’ meeting by three months to August 22, in the hope of securing a sale in the interim.