Bain bid topped Virgin auction

A light aircraft with the banner 'We Love Virgin Australia' flew over Brighton Beach in support of the airline which has been forced into voluntary administration. Picture: Ian Currie

Stakeholders in the Virgin Australia sales process have been told that Bain Capital offered the most money in the second round of the competition, say sources.

Boston-based Bain and Cyrus Capital Partners have made it through to the final round of the contest to buy the carrier, which collapsed in April with $6.8bn of debt.

They will lob final bids around June 22.

Other groups contending for the operation in the second stage — US-based Indigo Partners with Oaktree Capital Management, and BGH Capital with AustralianSuper — are now out of the competition.

Outlier Brookfield also re-entered the race to make a bid in the second stage after earlier being excluded from the first stage of the process, but did not make it through to the final round.

As revealed by DataRoom earlier this week, knocked-out bidders BGH Capital and AustralianSuper were proposing to inject between $800m and $900m of working capital into Virgin Australia straight after gaining ownership, if they had been successful.

BGH Capital’s consortium was understood to be offering a good deal for employees, but unsecured bond holders would receive no payment.

It was said to have put forward a bid amounting to more than $4bn. Some say Indigo Partners put forward an even more lucrative deal than BGH. It would have seen the Virgin Australia unsecured bond holders owed $2bn paid back some money while also looking after employees.

Sources say BGH and Brookfield put forward proposals that came with preconditions that would be difficult to meet.

There were proposals that were understood to be wanting commitments from the federal government for an extension of Job Keeper beyond September and aircraft slots at airports held for up to two years, even though they are typically allocated on a ‘‘use it or lose it’’ basis.

These were factors that the administrator would have little control over.

But DataRoom has learned that Bain offered the best bid in terms of money, confirming the hunch of many observers to the process that the American buyout fund is the strongest contender.

It is understood that Virgin’s voluntary administrator Deloitte favoured Cyrus and Bain because they proposed to maintain the largest footprint in terms of Virgin Australia’s operations.

Little is known about the approach of Cyrus Capital, which was this week trying to find a banking adviser and has now secured McGrath Nicol to offer assistance.