Virgin Australia Holdings bondholders have lodged a recapitalisation proposal with the airline’s administrator, rivalling bids from Bain Capital and Cyrus Capital Partners, according to a person with knowledge of the matter.
The proposal involves a debt-to-equity swap among bondholders owed around $2 billion plus a fresh capital injection of around $1 billion, a person told Reuters, who was not authorised to speak publicly.
Virgin Australia would remain a listed entity as part of the plan, which would allow bondholders to recoup around 70 cents on the dollar of their investment, the person added.
The proposal would back the existing management team, honour full employee entitlements, customer travel credits and frequent flyer points, according to the source.
Australia’s second largest airline entered voluntary administration in April owing nearly $7 billion to creditors, having struggled financially even before the coronavirus pandemic crushed travel demand.
Virgin Australia’s administrator, Deloitte, declined to comment.
Deloitte had said on Monday after receiving final offers from Bain and Cyrus that it hoped to select a preferred bidder by June 30.
Deloitte did not release financial details of those offers but said both planned to operate the airline as a smaller, single-branded domestic and short-haul international carrier with growth potential.
Virgin Australia competes against larger rival Qantas Airways Ltd in the domestic aviation market, which is an effective duopoly.