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Virgin Atlantic Seeks Rescue Approval as Cash Running Out - Bloomberg

New money, as we already knew, is being contributed by Virgin Group (c £200 million) and US hedge fund Davidson Kempner Capital Management (c £170 million). The Davidson Kempner investment will be secured against whatever Virgin Atlantic assets are not already pledged to other lenders.

£450 million of creditor deferrals and £400 million of payment delays and waivers have been provided by the two shareholders, Virgin Group and Delta Air Lines

An existing $280 million revolving credit facility (ie overdraft) which is secured against aircraft and engines will be turned into a standard loan with a higher interest rate

One aircraft engine will be removed from the overdraft facility. This will allow the airline to use it as security for a further $30 million loan. (Yes, aircraft engines are so expensive – around $50 million in fact – that you only need one as security for a $30m loan!)

The aircraft leasing companies which own 24 Virgin Atlantic aircraft will be given a choice of accepting a cut in leasing rates or the immediate termination of their lease. Virgin Atlantic is presumably confident that lessors will accept the cut in fees, as it won’t have much of a fleet left if 24 aircraft are returned.

Some creditors will receive preference shares in return for writing off money owed to them

Trade creditors will be paid 80% of what they are due. Only 10% of the remainder would be paid immediately with the remainder paid in quarterly sums through to September 2022. This does not apply to ‘business critical’ suppliers such as airports, which will be paid in full.
 
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