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May 15, 2020 10:54 UTC

Akita Michinoku Capital Analysts Comment as Buyers Queue Up to Acquire Virgin Australia Following Collapse

TOKYO--(BUSINESS WIRE)-- According to analysts at Akita Michinoku Capital, the travel industry is facing a volatile current and an unpredictable future, but you will never realize from the influx of suitors weighing up offers to buy Virgin Australia Holdings Ltd. Even as shares of airlines plunge on predictions that air travel will take years to return to normal levels of passengers, at least 20 prospective buyers have expressed an interest in purchasing Virgin Australia. That makes the collapsing carrier a contested asset in a climate that has put several other transactions on hold.

The administrator of the airline, Deloitte, said on Friday that it is anticipating as many as eight possible bids and that three will be shortlisted as formal offers.

"Indian billionaire Rahul Bhatia's InterGlobe Enterprises Ltd. revealed that it would be participating in the Virgin Australia sale, along with Brookfield Asset Management Inc., Bain Capital and BGH Capital who are also considering submitting indicative proposals," commented Martin Thornton, Head of Corporate Trading at Akita Michinoku Capital.

"The government of Queensland, which had shown interest, is not prepared to submit an indicative offer yet as their advisors are still making their evaluation," added Martin.

The offers give a snapshot of how investors believe they could turn the money-losing operations of Virgin Australia into a viable investment. The administrators' problem is which candidate has the best shot at untangling the web of regional politics and industry confusion around Australia's second-largest carrier.

Virgin initiated voluntary administration last month after becoming overwhelmed by A$6.5 billion (US$4.2 billion) worth of debt amplified by years of decline and a significant shortfall in sales due to travel cancellations related to the coronavirus.

"The reason investors are drawn to the airline is that Australia is something of an oasis in aviation partly due to the size of the market," commented Oliver Wright, Director of Corporate Equities at Akita Michinoku Capital.

"It is essentially a duopoly, with some room for a little bit more, but it's quite a lucrative market. It's also very likely to come back relatively swift because of the way they've dealt with the crisis so far," Oliver concluded.

Deloitte said in April, Virgin's secured creditors are owed A$2.28 billion. If they choose not to waive enough of what they are owed, the airlines final selling price could be as high as A$3.5 billion.

About Akita Michinoku Capital

Established in 2009, Akita Michinoku Capital is a respected wealth management company with a global network reaching over 40+ countries. By uniting financial markets from East to West, we can support our clients through all facets of wealth management and provide our clients with the best possible investment performance through a broad range of investment products.


Mr. James Kenta, Head of Research.
Switchboard +81 3 4590 0732 | Email james.kenta@amctradinggroup.com
28F Kachidoki View Tower, 8-11-1, Kachidoki, Chuo-ku, Tokyo, Japan 104-0054

Source: Akita Michinoku Capital

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