Virgin Atlantic nears deal for $504 million rescue

Bloomberg

Virgin Atlantic Airways Ltd is closing in on a 400 million-pound ($504 million) rescue led by Davidson Kempner Capital Management after the US hedge fund offered more favorable terms than other potential backers, people familiar with the matter said.
Davidson Kempner has offered funding conditions that an alliance of Elliott Management Corp and UK investment firm Greybull Capital declined to match, while Centerbridge Partners has stepped back after coming late to the process, according to the people, who asked not to be identified because the talks are private.
Billionaire Richard Branson would also inject cash into the airline he founded and controls. Virgin Atlantic could announce details of the financing package as soon as early next week if it’s able to pin down final elements, said one of the people. The Virgin Group board will be updated on the situation and could meet to sign off on a deal after the weekend if sufficient progress is made, the person said.
As the deal stands now, the UK government, which earlier rejected a bailout request from the Crawley, England-based carrier on the grounds that its credit rating was too low, would have no role in the rescue, the person said.
A UK Treasury spokesman declined to comment.
Davidson Kempner and Elliott both declined to comment, while Centerbridge was unavailable for comment. Virgin
Atlantic said it’s continuing to work on a comprehensive
recapitalisation.
“We greatly appreciate the support of our shareholders, creditors and private investors and by working together, we will ensure that Virgin Atlantic can emerge from the crisis a sustainably profitable airline, with a healthy balance sheet,” the airline said.
New York-based Davidson Kempner, which has about
$30 billion of assets under management, would provide about half the money, one of the people said.
Branson has also committed to inject around 200 million pounds as part of a plan that wouldn’t affect equity holdings in the airline.
An agreement isn’t certain, and Elliott could seek to rekindle negotiations on its own terms if final hurdles aren’t cleared, one person said.
Virgin Atlantic was started in 1984 by Branson, then a 30-something music entrepreneur. The billionaire, now 69, has
said he chartered a plane on a
whim, after a trip to the Caribbean on a commerical airliner was cancelled.