Appeal has potential to ground Virgin deal

TWO key Virgin Australia investors have launched a challenge to the deal struck by administrators to sell the embattled airline to Bain Capital.

Singapore-based Broad Peak Investment Advisers and Hong Kong-based Tor Investment Management, which own bonds issued by Virgin, have submitted an application challenging the deal to the mergers and acquisitions watchdog, the Takeovers Panel.

They are arguing the “circumstances regarding the process conducted by the administrators are unacceptable and have the effect of precluding an alternative” deal being presented to Virgin creditors at their next meeting, in mid-august.

The bondholders are seeking interim orders from the panel to get access to information about the deal to sell Virgin — which had entered administration on April 21 with debts approaching $7 billion — to Bain. Details of the deal, signed on June 26, have not been released publicly.

The panel said the applicants were also seeking orders to allow the bondholders to make an alternative proposal to the meeting of creditors.

Deloitte partner Vaughan Strawbridge, an administrator for Virgin, last week formally rejected an alternative proposal put by the bondholders.

The Takeovers Panel said it had received the application from the two bond holders but had not yet appointed a panel to consider the matter.

Representatives of investors with the $2 billion in unsecured bonds and similar Virgin assets have been concerned they will only get a few cents back from each dollar they invested as a result of the Bain deal signed last month. There are about 6000 retail investors who have money invested in Virgin bonds alongside another 30 global institutions.

Mr Strawbridge wrote to the bondholders on June 29, rejecting their offer.

He said he was “unable to take it forward due to its highly conditional nature”.