SYDNEY (Reuters) – Virgin Australia Holdings Ltd <VAH.AX> bondholders plan to propose to creditors a debt-to-equity swap as an alternative deal to the purchase by Bain Capital agreed by the company’s administrator, a lawyer for the bondholders said on Friday.
Singapore’s Broad Peak Investment Advisers and Hong Kong’s Tor Investment Management plan to put forward an alternative deed of company arrangement (DOCA) to a vote at a creditor’s meeting next month, the lawyer Ian Jackman said.
“The administrators will no doubt put forward a DOCA that represents the Bain transaction at the second meeting of creditors,” he said at a court hearing.
“We for our part will have an alternative DOCA … with a view to improving the return of creditors as well as ensuring the future viability of the company.”
Broad Peak and Tor hold around A$300 million ($208 million) of Virgin’s A$2 billion of unsecured bonds, according to a court submission published on Thursday.
Their proposal involves interim funding to allow Virgin to continue operating, the conversion of noteholders and certain other unsecured creditors’ debts into equity worth around 69 cents on the dollar with an option for creditors to sell their shares for cash, the submission said.
There is a 100 cents on the dollar return for certain essential and ongoing creditors, it added.
The terms of Bain’s deal agreed with the administrator Deloitte have not been disclosed publicly.
The bondholders have sought access to more details on the terms of the Bain deal to help them prepare their rival proposal ahead of the creditor’s meeting next month, Jackman said.
“The question of disclosure is really one of timing not of content,” he said. “We are not seeking disclosure to the public at large.”
However, at the end of a court hearing on granting access to confidential Bain deal terms, judge John Middleton said he planned to release orders early next week that would not give bondholders access to the details.
($1 = 1.4405 Australian dollars)
(Reporting by Jamie Freed and Paulina Duran; Editing by Shri Navaratnam and Himani Sarkar)