Restructuring Deal of the Year

Virgin Australia

• Virgin Australia is Australia’s second largest airline with (pre administration) revenue of $5.8Bn and approx. 10,000 employees.
• The restructure via a VA led by administrators John Greig, Sal Algeri, Richard Hughes and Vaughan Strawbridge (Administrators), and a substantial Deloitte team, was not only large and complex, it was also innovative.
• Innovation was seen in assuring certainty of sale to Bain Capital (as successful bidder) through both a VA power of sale and DoCA.  Challenges of operating such a large airline in administration were immense, exacerbated by the constraints of COVID.
• In addition to the many layers, volume and jurisdiction of creditors, the Administrators had to navigate through the concerns of multiple stakeholders including Federal and State Governments, several unions and employee groups, airports, aircraft lessors, IATA and regulators such as CASA and ASX.  The Administrators had to find innovative ways to run the airline on very limited cash, including switching costs from fixed to variable such as ‘power by hour’ leasing arrangements and court orders to minimise the Administrators’ personal liability.
• The restructure included repositioning 1000+ contracts to a more competitive position with a single fleet type and more efficient route plan. It preserved 6,000 jobs, all customer travel credits and pre-paid flights and a return to all other unsecured creditors.
• Virgin Australia now benefits from a very deleveraged balance sheet, more flexible cost base and a redefined strategy focussed on value accretive routes.
• The primary TMA member firms leading the restructure were Deloitte, Clayton Utz, Houlihan Lokey, Bain Capital, Herbert Smith Freehills, KordaMentha and 333.

Congratulations to our TMA Member Firms

Small Turnaround of the year

Informotion

• Vantage Performance developed a turnaround plan in the midst of COVID to stabilise a service delivery business, including binding a broad team together engagement with key stakeholders.
• It was a well executed strategic turnaround; facilitated significant increases in revenue and profitability, and overseas expansion.
• They overcome the challenges of remote service delivery during COVID but still growing revenue and client base.
• Merger with strategic party and completed capital raising to support growth; repaid creditors in full including interim support from Longreach Capital.

Congratulations to our TMA Member Firms

Mid - Size Turnaround of the Year

Gascoyne Resources Limited

• A gold mine going into VA might be expected to ‘toast’ its unsecured creditors and attract opportunistic purchasers to pick up a good asset cheap. Not so for the FTI Consulting team that tenaciously turned around and recapitalised the Gascoyne mine over a 500+ day marathon administration.
• The first 6mths FTI spent on significant operational and financial improvement during this period.
• Complex stakeholder management including employees, Government, creditors, advisers.
• Recapitalised via equity raise and debt refinancing, and relisted on ASX, strengthening business viability and growth potential post turnaround.
• Employees and secured creditors paid in full; unsecured creditors received 96-100c when expected significant shortfall on VA.
• Other member firms involved in the turnaround included Herbert Smith Freehills.

Congratulations to our TMA Member Firms

Large - Size Turnaround of the Year

Best & Less Group

• Best & Less was a stand-out in the large turnaround category. Allegro Funds acquired a bricks & mortar retail chain just before the COVID hit and managed to more than triple its earning thru the pandemic
• What started as a poorly performing subsidiary within the failed Steinhoff group became a true turnaround story which involved:
• • a separation from the Steinhoff group and splitting out the brands into separate businesses and entities and allowing a clean exit for the vendors;
  • innovative working capital facility whilst the turnaround was executed;
  • a financial restructuring which avoided VA for two of the three main brands, and tactically leveraged a VA process for Harris Scarfe; and
  • a turnaround which involved retaining, re-branding and repositioning Best & Less as a modern, profitable baby and kids specialist which has been successfully listed on the ASX
• The success of the turnaround was evident from the roll-out of new stores, expansion into new categories, and importantly the more than three times increase in EBITDA in the 20 months since the commencement of the turnaround (and the 50% increase in market capitalisation in the two months since listing).
• There were some very strong submissions in the category, but the great performance of Best & Less post-restructure and its wholistic approach to turnaround is what really set it apart as a turnaround success.
• Other member firms involved in Turnaround included Ashurst, Deloitte, Gordon Bros, Macquarie Bank & PricewaterhouseCoopers.

Congratulations to our TMA Member Firms

Allegro Funds & TMA Australia Turnaround Case Competition winners

• Steven Cunningham – Associate Director, KordaMentha
• Sophia Paikopoulos – Senior Business Analyst, KordaMentha
• Alex Green – Investment Analyst, Rive Capital
• Dylan Genau – Executive Analyst, KordaMentha
• Sunny Joshi – Manager, ANZ