The following is a statement and confirmation that Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the support of all four creditor classes who voted on the plan.
LONDON, England – A Virgin Atlantic spokesperson said: “In order to complete the private-only, solvent recapitalisation of the airline, our Restructuring Plan is going through a court-sanctioned process under Part 26A of the UK Companies Act 2006.”
“[Today] Virgin Atlantic has reached a significant milestone in safeguarding its future, securing the overwhelming support of all four creditor classes, including 99 percent support from trade creditors who voted in favour of the plan.
“The next step is an English High Court hearing on September 2, to sanction the restructuring plan. We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the restructuring plan, at a hearing scheduled on September 2. A US Chapter 15 procedural hearing will follow on September 3, ensuring Virgin Atlantic’s restructuring plan is recognised in the US, paving the way for the £1.2 billion private only, solvent recapitalisation of Virgin Atlantic.
“Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel.”
Background
The restructuring plan was announced on July 14, 2020. The four classes of creditors comprise (1) creditors under the company’s revolving credit facility (100% support), (2) lessors of aircraft to the company under operating leases (100% support), (3) our shareholders (100% support) and (4) certain of the company’s trade creditors (99% support from those voting in favour of the Plan).
Virgin Atlantic’s restructuring plan is based on a five-year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it paves the way for the airline to successfully rebuild its balance sheet and return to profitability.
The recapitalisation will deliver a refinancing package worth c.£1.2 billion over the next 18 months in addition to the self-help measures already taken, including cost savings of c.£280 million per year and c.£880 million rephasing and financing of aircraft deliveries over the next five years.
- Shareholders are providing c.£600 million in support over the life of The Plan including a £200 million investment from Virgin Group, and the deferral of c.£400 million of shareholder deferrals and waivers;
- Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170 million of secured financing;
- Creditors have also supported the airline with over £450 million of deferrals;
- The recapitalisation plan also has the full support of credit card acquirers (Merchant Service Providers) Lloyd’s Cardnet, First Data and American Express.
The US proceeding on September 3 is a continuance of the standard procedural steps available to Virgin Atlantic to protect its assets in the US jurisdiction while (i) Virgin Atlantic’s solvent recapitalisation is completed via the UK court process and (ii) then beyond, as the recapitalisation plan is enacted and delivered going forward. This is not a Chapter 11 bankruptcy filing. It is a filing which supports and recognises the solvent recapitalisation of the airline in the UK courts.
