Cyrus abandons Virgin Australia bid, putting Bain in the pilot's seat

Virgin's administrator slammed for "lack of engagement" with the Branson-affiliated investment giant.

By David Flynn, June 26 2020
Cyrus abandons Virgin Australia bid, putting Bain in the pilot's seat

Cyrus Capital is walking away from the contest to take over Virgin Australia, in a dramatic move which sets up competitor Bain Capital to take control of the airline.

Update: Bain Capital has now been announced as the successful bidder for Virgin Australia

In a statement issued on Friday morning, founder and chief investment officer of the New York-based investment and private equity firm, Stephen Freidheim, said "I am disappointed that it has become necessary to withdraw our offer."

The statement cited "a lack of engagement by the administrator" Deloitte as the reason for the shock decision.

"Cyrus presented to the administrators of Virgin Australia Holdings an offer to acquire the airline, its regional business and the frequent flyer program Velocity, in accordance with the administrators’ procedures," the statement said.

"However, since then, the administrators have not returned calls, emails, or meaningfully engaged with Cyrus to progress its offer."

"On the morning of 25 June 2020, Cyrus submitted a further unsolicited package of value improvements and other compelling measures to increase the value of the transaction, improve the return to unsecured bondholders and deliver more certainty for the administrators. This too received no response other than an acknowledgement of receipt."

"Despite the material improvements put forward, the administrators have still not engaged with Cyrus on its offer."

However, Freidheim left the door open for Cyrus to return to the table, saying the firm "would be willing to reinstate our offer if the administrators agree to re-engage in good faith, productive discussions with a view to concluding a transaction that will benefit all key stakeholders – employees, customers, Velocity members and bondholders."

Cyrus had been firming up as the preferred bidder of Virgin Australia's workforce and unions, although Bain boasted that it had substantially deeper pockets and could fully fund the Virgin Australia takeover without relying on other backers to form a consortium.

Cyrus, like Bain, wanted to reposition Virgin Australia as a mid-market airline with a smaller and simplified fleet, flying mainly domestic routes except for short-range trips such as to New Zealand, and cited its own involvement in the launch of Virgin America as a model for Virgin Australia 2.0.

Deloitte has previously said it would nominate its preferred bidder by June 30, although the process has been complicated  by an eleventh-hour proposal by Virgin Australia's 6,000 bondholders, who are owed some $2 billion and want to see that debt converted to equity, and are offering an additional $1 billion to recapitalise the airline.

Also read: Bain's vision for Virgin Australia 2.0 – but what's a 'hybrid' airline?


David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.


11 Jul 2014

Total posts 935

Government should be offering $1.4 Billion to both Qantas and Virgin fin return for shares then off loading both lots of shares in 2-3 year. They say trucks carry the country but the airlines are just as important.


09 May 2020

Total posts 553

Imagine an Australia without the excess freight on the road.

Seriously even if a rail network between capital cities with no other stops would have probably cut the truck traffic on freeways by 20-30%, probably more in rural highways.

Etihad - Etihad Guest

06 Apr 2012

Total posts 123

"On the morning of 25 June 2020, Cyrus submitted a further unsolicited package of value improvements..." Correct me if I'm wrong but the deadline for accepting final offers was June 22. Sounds like Cyrus is trying to slip in some late homework to get a leg up on the other contender who delivered their final bid on time.

Virgin Australia - Velocity Rewards

30 Aug 2018

Total posts 12

They filed their bid on time, but interpreted the silence from the administrators as a signal their offer wasn't as good, hence the "further unsolicited package".

07 Jan 2016

Total posts 35

As Neil Hansford correctly pointed out: "Full and Final means exactly that and after Monday (June 22nd) the Administrator ethically shouldn't talk to a bidder whilst they are considering bids". Cyrus's window to continue negotiation had well and truly closed - and they know it.


03 May 2013

Total posts 668

As Gomer Pyle used to say...."surprise surprise!"

06 Apr 2018

Total posts 5

I suppose withdrawing looks better than losing.

14 Nov 2015

Total posts 42

Should have made their best offer first. You often only get one shot at these things.

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