The new rival proposal would back the existing management and honor full employee entitlements SYDNEY: Bondholders of Australia’s second largest airline have put forward a proposal to keep Virgin Australia a listed entity, two days after two private equity companies, Bain Capital and Cyrus Capital Partners, made final and binding offers to administrator Deloitte. “Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline,” a spokesman for the bondholders said in an emailed statement. This involves a debt-to-equity swap among bondholders owed around A$2 billion ($1.39 billion) plus a fresh capital injection of around A$1 billion, one person with knowledge of the proposal said. Broad Peak, a Singapore hedge fund backed by Temasek, is involved in the bondholders’ proposal, they said. The firm did not immediately respond to a request for comment. One of the airline’s secured creditors, speaking on condition of anonymity, said: “The bondholders are in an interesting position, they are creditors and a deal can’t be done without them.” The new proposal would allow bondholders to recoup around 70 cents on the dollar of their investment, the person said. A second source said that return was a future estimate based on share trading expectations. The bondholder statement did not identify those taking part, saying only they included thousands of retail investors. FIIG Securities, Northern Trust Asset Management, Sargon CT and the Bank of New York Mellon are all on the creditors’ committee. Virgin, which competes with Qantas Airways effectively in an domestic duopoly, entered voluntary administration in April owing nearly A$7 billion to creditors. The airline had struggled financially even before the coronavirus pandemic. The bondholder proposal would back the existing management team, honor full employee entitlements, customer travel credits and frequent flyer points, the two sources said. They were not authorized to speak on the record. Deloitte declined to comment on the bondholder proposal. The administrator had said on Monday after receiving the Bain and Cyrus offers that it hoped to select a preferred bidder by June 30. A meeting is scheduled for August to vote on a deal, which would need the approval of at least 50 percent of creditors by both value and number.