Virgin bondholders pin hopes on administrators revaluing aircraft debt

One of the few hopes Virgin Australia bondholders have of receiving anything from its sale hangs on whether the collapsed airline's administrators decide to cut the amount owed to aircraft lessors down to size. There are growing fears that owners of $2b worth of unsecured bonds will walk away from the Virgin administration empty handed as the two final bidders, Cyrus Capital and Bain Capital, prepare to submit binding offers for the business by next Monday. Making up less than a third of Virgn's $6.8b debt pile, bondholders have not been expected to form a large enough voting group to block any rescue deal administrators Deloitte put to creditors in mid-August. One bondholder, who spoke on the condition of anonymity due to confidentiality obligations in relation to the matter, said that secured creditors, including aircraft owners (which are owed $1.8b), had debts from long-term contracts, many of which would be renewed. He said that could prompt Deloitte to reduce how much of their debt to recognise and the number of votes they are allocated, which would boost the bondholders' relative voting strength and force bidders to offer them something to win their support. "The $7b in debt is if they are liquidated - that's if you sack everyone, and that's assuming all the planes are sent back to the lessors", he said. "But this is being sold as a going concern." Story has more.<br/>