Virgin's unsecured bondholders say the airline should not be sold for "pandemic prices".Credit:James Alcock
There has been growinganxiety among bondholders they will get as little as 10¢ in the dollar of what they are owed or nothing at all under a sale of Virgin to shortlisted bidders Bain Capital or Cyrus Capital Partners.
Virgin would remain listed on the Australian Stock Exchange under the proposal,asflagged by this masthead on Monday,with shares issued to about 6000 bondholders made up of around 30 major institutional investors and thousands of"mum and dad"retail investors.
Bondholders would put up $800 million to recapitalise Virgin,which went into voluntary administration with debts of $6.8 billion in April,as well as $125 million to keep the airline alive during the administration process.
"Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline,"a spokesman for the bondholders said in a statement.
"This approach offers the fastest pathway to return Virgin to the new operating environment for Australian aviation and positions the airline to resume high-quality services to its millions of loyal Australian customers."
Bondholders that choose to sell their shares immediately would recover around 70¢ for each dollar they are owed,or could hold onto their shares with the hope of selling at a higher price once the global aviation industry has recovered from the COVID-19 pandemic.
Faraday's argument is that Virgin should not sell for"pandemic prices"and there will be a better outcome for creditors if they take ownership until state and national borders reopen.