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BGH, Bain, Indigo Partners, Cyrus Capital make Virgin Australia shortlist: source

HONG KONG/SYDNEY (Reuters) – Virgin Australia Holdings Ltd’s (VAH.AX) administrators have short-listed potential buyers BGH Capital, Bain Capital, Indigo Partners and Cyrus Capital Partners, a source with knowledge of the matter said on Monday.

FILE PHOTO: A Virgin Australia Airlines plane takes off from Kingsford Smith International Airport in Sydney, Australia, March 18, 2020. REUTERS/Loren Elliott/File Photo

The airline’s administrators expected to receive as many as eight non-binding indicative offers from potential buyers before a submission deadline on Friday.

Binding offers for the airline are due on June 12. The company entered voluntary administration last month owing creditors nearly A$7 billion ($4.5 billion), making it the biggest Asia-Pacific casualty of the coronavirus crisis hitting the global aviation industry.

The strong interest in Virgin Australia at a time when the world aviation market is largely grounded shows the long-time attractiveness of the Australian domestic market, a duopoly between Qantas Airways Ltd (QAN.AX) and Virgin.

The administrators at Deloitte said in a statement they had shortlisted a small number of well-funded parties with strong aviation credentials but declined to name them.

Bain, which owns Trans Maldivian Airways, is being advised on its Virgin offer by Jayne Hrdlicka, the former head of Qantas budget airline Jetstar, according to media reports.

One of BGH’s founders, Ben Gray, led a failed takeover offer for Qantas in 2007 when he worked at private equity giant TPG.

Phoenix-based Indigo Partners’ founder Bill Franke is the chairman of U.S. budget carrier Frontier Airlines, Chile’s JetSmart and Hungarian Wizz Air (WIZZ.L).

Cyrus Capital was an investor in collapsed British regional carrier FlyBe, alongside Virgin Atlantic.

Bain and Indigo Partners declined to comment, while BGH and Cyrus Capital could not be reached immediately for comment.

The shortlisted bidders were first named by The Australian Financial Review.

Other parties that had put in non-binding indicative offers included Brookfield, India’s InterGlobe Enterprises and Australian mining magnate Andrew Forrest, people with knowledge of the matter told Reuters.

Brookfield on Sunday told the administrators it would exit the process if more than two bidders were shortlisted because it would be unworkable given the tight timeframe, a source with knowledge of the matter said. Brookfield declined to comment.

The administrators said they understood some parties would be disappointed they were not shortlisted and hoped they would respect the decision predicated on the business continuing and achieving the best outcome for all people impacted.

FILE PHOTO: A Virgin Australia plane is seen at Kingsford Smith International Airport in Sydney, Australia, March 21, 2020. REUTERS/Loren Elliott/File Photo

The shortlisted parties will receive more detailed financial and operational information, management workshops and meetings with as many of the financiers, landlords, suppliers, unions and other stakeholders of the business as possible before making final bids, the administrators said.

They are aiming to agree a deal with the winning party by the end of June.

($1 = 1.5567 Australian dollars)

Reporting by Scott Murdoch, Paulina Duran and Jamie Freed; additional reporting by Tracy Rucinski in Chicago; Editing by Christian Schmollinger and Stephen Coates

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