Dubai Aerospace Enterprise among Virgin Australia lessors

Virgin Australia is said to owe almost 10,000 creditors A$6.9 billion. (Supplied)
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Updated 25 April 2020

Dubai Aerospace Enterprise among Virgin Australia lessors

  • The Deloitte administrators are seeking court orders for an extension of up to four weeks from their appointment to decide if leased planes are required for continuing operations of the business

SYDNEY: Virgin Australia Holdings owes A$6.9 billion ($4.39 billion) to more than 10,000 creditors based on an initial review, and will seek a three-month payment waiver from aircraft lessors, its administrators said.

Virgin said this week it succumbed to third-party led restructuring that could lead to a sale, turning Australia’s second-biggest airline into the Asia-Pacific’s biggest victim of the coronavirus crisis.
The figure owed to creditors includes about A$2.3 billion of secured debt, A$2 billion of unsecured bonds, A$1.9 billion of aircraft leases, A$450 million owed to employees, A$167 million to trade creditors and A$71 million to landlords, according to an affidavit from administrator Vaughan Strawbridge.
The bankrupt airline’s administrators are liable to pay leases on its aircraft starting April 28, because they will not inform lessors whether they would renege on leases within five business days, as required by law, the documents, posted on the website of Strawbridge’s firm Deloitte, showed.
The Deloitte administrators are seeking court orders for an extension of up to four weeks from their appointment to decide if leased planes are required for continuing operations of the business.
“Next week we will be wanting to engage with you to firm up on interim arrangements with the administrators to support the process being followed to achieve a recapitalization and sale, which will include a request for a three-month waiver of rent and other financial payment obligations,” they said in a letter.
A document released by the Federal Court of Australia showed law firm King & Woods Malleson (KWM) said it was representing 17 aircraft lessors and financiers.
These include Aercap Holdings NV, Bank of China, SMBC Aviation Capital, ORIX Aviation, GECAS, Dubai Aerospace Enterprise, Bank of America Corp. and BNP Paribas SA.
The lessors with the biggest financial exposure to Virgin include Goshawk, Avation PLC, Aercap, ORIX and SMBC, each with estimated monthly income of at least $1 million from the airline, aviation data provider Cirium said.

HIGHLIGHTS

● Airline has more than 10,000 creditors.

● Entered administration due to virus crisis.

● To seek three-month rent waiver from lessors.

KWM said its clients wanted to work with the administrators, but required them to pay for regular maintenance and insurance and report on the use of aircraft.
Perth Airport said it had seized a number of Virgin Australia aircraft that were parked there not currently conducting flights to protect the airport’s interests, given the airline had “significant” outstanding invoices.
“Perth Airport has taken liens over a number of Virgin aircraft — a standard practice in these situations,” a spokeswoman said.
Sydney Airport and Melbourne Airport said they had not seized Virgin aircraft. “We prefer to work constructively with our airline partners through this period,” a Sydney Airport spokesman said.
For now, Virgin is flying a skeleton schedule under its regular management team as administrators seek a buyer for the entire operation.
Private equity and distressed situation specialists Apollo Global Management, Oaktree Capital Management and BGH Capital are among more than 10 firms to express interest in the restructuring, Reuters has reported, citing five sources.


G7 backs extension of G20 debt freeze, calls for reforms 

Updated 25 September 2020

G7 backs extension of G20 debt freeze, calls for reforms 

  • Group of Seven ‘strongly regret’ moves by some countries to skip participation in debt relief for world’s poorest nations

WASHINGTON: G7 finance ministers on Friday backed an extension of a G20 bilateral debt relief initiative for the world’s poorest countries, but said it must be revised to address shortcomings hindering its implementation.

In a lengthy joint statement, the ministers from the Group of Seven advanced economies said that they “strongly regret” moves by some countries to skip participation by classifying their state-owned institutions as commercial lenders.

Two officials from G7 countries said the reference was clearly targeted at China, which has refused to include loans by the state-owned China Development Bank and other government-controlled entities in its official bilateral debt totals when dealing with countries seeking debt relief.

The ministers also acknowledged that some countries will need further debt relief going forward, and urged the Group of 20 major economies and Paris Club creditors to agree on terms by next month’s meeting of G20 finance ministers.

“Everyone was disappointed by China’s lack of transparency and commitment,” said one official, who asked not to be named.

At an online meeting hosted by US Treasury Secretary Steven Mnuchin, the ministers underscored their commitment to work together to support the poorest and most vulnerable countries, which have been hard hit by the coronavirus pandemic.

They asked the International Monetary Fund and World Bank to provide regular updates on the financing needs of low-income countries and propose solutions for expected financing gaps, including through instruments to leverage access to private finance.

They said the Debt Service Suspension Initiative (DSSI) approved in April by G20 countries, including China, had helped 43 countries defer $5 billion in official debt service payments to free up money to respond to the pandemic.

But the total is far short of the $12 billion in savings that were initially projected, and represents just over half of the 70-plus countries that were eligible.

The ministers said the initiative should be extended, “in the context of a request for IMF financing,” and called for a new term sheet and memorandum of understanding to improve its implementation.

The ministers said claims classified as commercial under DSSI would also be treated as such in future debt treatments and for implementation of IMF policies, delivering a stern reminder to China and others that have not been fully transparent about the scope and terms of government lending to poor countries.

The ministers also called again on private lenders to implement the debt relief initiative when requested, noting that the absence of private sector participation has limited the potential benefits for several countries.