As the sale process for Virgin Australia continues, the funding of a transaction by bidders continues to be a point of interest.
Bain Capital is believed to be using its own debt from within its credit arm to provide the funding certainty it has needed to progress in the contest, but is yet to lock in any bank debt.
However, it might refinance the debt once it has acquired Virgin.
It is understood that BGH Capital had not locked in bank debt for its bid before it was knocked out of the competition.
Apparently, bidders were told that funding needed to be in place for any party to proceed through to the final round of the contest.
The challenge for administrator Deloitte when it comes to allowing a party through to the final round in the competition without the guarantee of funding in place is that should the existing lenders not agree to continue committing to the airline as financiers, it could fall into receivership and later liquidation.
An administrator is always expected to choose the party that offers a level of commitment on the funding side over a higher price.
However, the talk in the market is that Bain’s offer was also the largest from a monetary perspective, potentially offering to keep more of the airline intact than other groups.
The Bain bid has been described as being capable of completion subject to contract terms.
Yet the thinking is that Bain will ultimately be buying a much smaller airline than the administrator is trying to sell the group.
Final bids from the last two bidders, Cyrus Capital Partners and Bain Capital are due on June 22 for the airline that collapsed during the coronavirus crisis in April with $6.8bn of debts owing.
Some observers still are not convinced Virgin Australia ends up with a buyer by the end of the month and say it could be a broken process, winding up with no deal.
This could play well into the hands of a group such as the listed Alliance Aviation.
Alliance is a Brisbane-based regional fly in fly out operator that could take over the vacated Virgin assets should it go into liquidation.
This could include the gate slots, plans and employees needed to service the most lucrative routes.
The carrier used to charter regional jets to Virgin for flights within Queensland.
Alliance is 19.9 per cent owned by Qantas.
Healthscope firmly in the sights of Bain
Bain Capital is closing in on its next big target struggling with too much debt – the country’s second-largest hospital operator Healthscope.
Incitec Pivot’s fertiliser price likely too high for some
Potential bidders have been given information about Incitec Pivot’s fertiliser unit, but the jury’s still out as to how much they will be prepared to pay..