Brookfield open to working with other Virgin bidders

Deloitte administrator Vaughan Strawbridge certainly won’t be upset that Brookfield has lobbed a fresh bid for Virgin Australia, almost two weeks since the Canadian giant walked away from his process.

No auctioneer knocks back competitive tension – and Brookfield is within its rights to have another crack.

It put a stack of time and resources into preparing its bid, and while it grew increasingly frustrated at the lack of clarity from Strawbridge over how the airline could be funded between mid-June and the second creditors meeting in late August – when a deal for Virgin will be formally voted on – its interest is strong and genuine.

While Brookfield was excluded from the talks with Virgin management and unions that have been held in the past two weeks under the formal administration process, sources said Brookfield’s latest pitch reflects the work it continued with in the past 12 days, plus previous encouraging discussions with the unions.

Brookfield still has reservations about the funding issue, but if there is another party out there that can see a way through this problem, the Canadian group is open to working with them. Brookfield has been in contact with the four short-listed bidders: BGH, Bain Capital, Indigo Partners and Cyrus Capital. 

But the short-list members will be livid if Brookfield is allowed back into the game when Strawbridge whittles down the bidder list again in the coming days.

Having played by Deloitte’s rules, the four bidders will justifiably argue that it would make a mockery of the administration process if Brookfield moves through to the next round.

One insider close to the bidding process said on Friday that Brookfield may find it tough to muscle its way back to the front of the field, given it is effectively a couple of weeks behind the four on the short list. Brookfield accepts that it is at something of a disadvantage, but believes its offer is compelling and hopes it has a real shot.

A tense weekend of negotiations looms, with the potential now that two bidders could team up.

But what all bidders agree on is that Strawbridge must move forward with only two bidders from Monday. Any more and a process that’s already being described as unwieldy will become impossible.

One bidder said that while meetings with management and unions in the past two weeks have been useful, it was hard to share too much detail with four bidders in the formal process.

But cut that down to two and negotiations can begin in earnest. And time is of the essence, the bidder says, given Strawbridge wants final bids by June 12 and Qantas will be using its downtime to plot the best way to sew up as much of the market as it can when domestic flying resumes.