Bain Capital agrees deal over Virgin Australia administrator to buy struggling airline

Bain Capital agrees deal over Virgin Australia administrator to buy struggling airline
Virgin Atlantic rival Qantas said it was also facing job cuts. (Reuters)
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Updated 27 June 2020

Bain Capital agrees deal over Virgin Australia administrator to buy struggling airline

Bain Capital agrees deal over Virgin Australia administrator to buy struggling airline
  • The proposal will be put forward to the airline’s creditors for their approval

SYDNEY: US private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings to buy Australia’s second-biggest airline for an undisclosed sum, banking on an aviation industry recovery.

Bain’s bid was chosen over a rival offer from Cyrus Capital Partners and a recaptalization proposal put forward by Virgin Australia bondholders, administrator Deloitte said.

Deloitte said it was not yet possible to estimate the return to creditors and did not expect any return to shareholders. An update on the return will be provided ahead of a creditor’s meeting in August, it said.

Many contracts with suppliers and aircraft lessors must be renegotiated before the return to creditors can be finalized, a source with knowledge of the matter told Reuters on condition of anonymity.

The deal will need to be approved by 50 percent of creditors by value and 50 percent by number to be finalized.

A spokesman for the 6,000 unsecured bondholders owed A$2 billion ($1.4 billion) said that despite Deloitte’s selection of Bain, they would continue to push for genuine consideration of their rival debt-to-equity swap proposal.

Bain is using private equity as well as its distressed and special situation funds for the deal, according to Deloitte, which said the deal provided a “significant” injection of capital into the airline.

HIGHLIGHTS

  • Not yet possible to estimate return to creditors.
  • Offer picked over rival one from Cyrus.
  • Deal will be voted on by creditors in August.

The Australian, the newspaper which carried the report, said Bain would inject A$600 million of cash up front, A$600 million to cover travel credits held by customers and A$450 million to cover employee entitlements, without saying where it got the information.

Deloitte and Bain declined to comment.

Bain plans to strengthen Virgin’s regional services and ensure the airline offers good value for leisure customers while continuing to serve business travelers, Mike Murphy, an Australia-based managing director at Bain, said in a statement.

Virgin Australia entered administration in April owing nearly A$7 billion to creditors, but is viewed as an attractive investment given the Australian domestic aviation market duopoly it shares with larger rival Qantas Airways.

Cyrus on Friday morning said it had pulled out of the bidding, citing Deloitte’s unwillingness to engage in meaningful talks.

The Bain proposal supports Virgin Australia’s current management team, led by Chief Executive Paul Scurrah, and its improvement plan for the airline, Deloitte said in a statement.

Virgin Australia has about 9,000 employees and Bain plans to keep 5,000 to 6,000 and operate 60 to 70 of its Boeing Co. 737 planes, Murphy told The Australian Financial Review on Friday, adding the airline could break even by February. 

Qantas on Thursday said it would cut more than 20 percent of its 29,000-strong workforce because of the bleak international travel outlook associated with the coronavirus outbreak.

Virgin Australia has a smaller international business than Qantas and is more exposed to the domestic market.


Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
Updated 35 min 4 sec ago

Egypt and Russia agree to resume all flights, including to resorts

Egypt and Russia agree to resume all flights, including to resorts
CAIRO: Egypt and Russia have agreed to resume all flights between the two countries in a call between their presidents, Abdel Fattah El-Sisi and Vladimir Putin, Egypt’s presidency said in a statement.
Flights to resort destinations Sharm Al-Sheikh and Hurghada were suspended after a Russian passenger plane crashed in Sinai in October 2015, killing 224 people.
The Egyptian statement did not specify a timeline for the resumption of flights, but Russia’s Interfax news agency reported this week that flights could resume in the second half of May.
An Airbus A321, operated by Metrojet, had been taking Russian holiday makers home from Sharm el-Sheikh to St. Petersburg in 2015, when it broke up over the Sinai Peninsula, killing all on board. A group affiliated with Daesh militants claimed responsibility.
The decision to resume flights followed “the joint cooperation between the two sides on this issue, and based on the standards of security and convenience provided for visits at Egyptian tourist destination airports,” the statement said.

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
Updated 49 min 20 sec ago

Egypt raises domestic fuel prices for first time since subsidy reform

Egypt raises domestic fuel prices for first time since subsidy reform
RIYADH: Egypt’s price-setting committee raised domestic fuel prices on Friday for the first time since it was formed in October 2019 following the completion of subsidy reforms, the petroleum ministry said in a statement.

Prices were last raised in July 2019 when Egypt, a net oil importer, finished phasing out subsides on fuel products as part of a reform program backed by the International Monetary Fund. Prices had remained stable over the past year after being lowered in April 2020 and October 2019.

The prices of 80-octane, 92-octane, and 95-octane fuel were raised by 0.25 Egyptian pounds each, to 6.25 Egyptian pounds ($0.40), 7.5, and 8.5 pounds per liter, respectively, the statement said.

The pricing committee’s mechanism links energy prices to international markets, and takes into account the exchange rate as well as the impacts of the coronavirus pandemic, the statement said.

Egypt lowered fuel prices in October 2019 following several rounds of price hikes as part of an austerity program that triggered discontent, including protests against President Abdel Fattah El-Sisi.

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
Updated 23 April 2021

Saudi share of Gulf economy rose to almost 50% in 2020

Saudi share of Gulf economy rose to almost 50% in 2020
  • Saudi GDP contracted 11.8 percent to $700.1 billion in 2020
  • UAE GDP fell 15.9 percent to $354.3 billion

RIYADH: Saudi Arabia increased its share of the GCC economy to almost half in 2020 as it weathered the COVID-19 pandemic better than its neighboring Arab states.

The Kingdom’s made up 49.8 percent of the bloc’s economy in 2020, up from 48.4 percent in 2019, Al Eqtisadiah newspaper reported, citing data from the International Monetary Fund (IMF) and Gulf statistical agencies.

Nominal gross domestic product (GDP) for the six GCC countries fell 14.3 percent in 2020 to $1.41 trillion, while Saudi GDP contracted 11.8 percent to $700.1 billion.

The UAE’s economy shrank 15.9 percent to $354.3 billion, representing 25.2 percent of GCC output.

Qatar had the third largest regional economy in 2020. It shrank 16.9 percent to $146.1 billion, representing 10.4 percent of GCC GDP.


Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
Updated 23 April 2021

Saudi vegetable traders accuse consumers over price increases

Saudi vegetable traders accuse consumers over price increases
  • Consumers buy more than they need during Ramadan, traders said

RIYADH: Vegetable traders and wholesalers in Saudi Arabia have blamed over-buying by consumers for price rises during the first days of Ramadan.

Prices have now returned to normal after doubling in some cases following a flurry of purchases at the beginning of the holy month, they told Al Watan newspaper.

The increase in vegetable prices was limited to 6 or 7 local agricultural products, while imported product prices are fixed, they said. There is no shortage of vegetables in the Kingdom’s markets, they added.

“We witness the unjustified rush of consumers of double shopping that exceeds the actual need, every year with the advent of the holy month, not only for vegetables, but for various food products,” a vegetable merchant said.

A vegetable trader in the Kingdom said that citizens should maintain the usual consumption of vegetables in Ramadan to ensure the stability of prices. He said that most of the customers deliberately buy above their actual needs at the beginning of Ramadan, which causes increased demand and higher prices.

“The farmers and suppliers are the ones who set the price and cause it to rise when the demand from consumers increases, while our role does not exceed the disposal of the product with a small profit,” he said.

Consumers on the other hand accused traders, farmers and suppliers of unjustified price increases with the advent of Ramadan.


PIF’s Innovative Energy nears completion of ADES International acquisition

PIF’s Innovative Energy nears completion of ADES International acquisition
Updated 23 April 2021

PIF’s Innovative Energy nears completion of ADES International acquisition

PIF’s Innovative Energy nears completion of ADES International acquisition
  • Innovative Energy has acquired 98.6 percent of ADES shares
  • ADES to be delisted from LSE within 20 days

RIYADH: Public Investment Fund (PIF)-owned Innovative Energy Holding is close to completing its acquisition of UK-listed oil and gas services provider ADES International Holding.

The cash offer from Innovative Energy has been declared unconditional in all respects, ADES said in a statement to the London Stock Exchange on Thursday. Innovative Energy has acquired or contracted to acquire 98.6 percent of ADES International and is commencing the compulsory acquisition process to acquire the remainder of the ADES shares.

The offer price of $12.50 per share in cash for each ADES share values the existing issued share capital (excluding Treasury Shares) of ADES International at approximately $516 million.

Innovative Energy intends to apply a request to the UK’s Financial Conduct Authority to remove the listing of ADES shares from the official list, and it will also submit a request to the London Stock Exchange to cancel trading of ADES shares, which is anticipated to take effect about 20 business from 21 April.

ADES accepted Innovative Energy’s $516 million offer to take it private in early March.

Following the completion of the transaction, ADES Investments Holding will own 57.5 percent of Innovative Energy, PIF will own 32.5% and Zamil Group Investment will hold 10 percent.

ADES International will move its operational headquarters to Saudi Arabia from the UAE, CEO Mohamed Farouk said in the statement.

“The partnership will create a national champion in Saudi Arabia in a critical part of the upstream value chain, said PIF Head of Local Holding Investments Division Yazeed Alhumied.

“Alongside the creation of significant employment opportunities in the Kingdom, this will help localize best-in-class practice and lead to the important knowledge transfer of fuel usage reduction technologies which can deliver both cost savings and environmental benefits,” he said.