Today's WSJ is reporting that Virgin America (VX) has lost the support of their US investors. The investors, Cyrus Capital Partners and Black Canyon Capital had negotiated a "put test" with Virgin Group when they funded the fledgling carrier some two+ years ago.
As we discussed earlier, US law (inanely) requires that US based carriers must be 75% owned by US entities and those entities must have at least 50% of voting control - an issue Alaska Airlines has already raised with the Department of Transportation in anticipation of this situation coming to a head.
Virgin America must now seek to raise additional capital from a particularly weak negotiating standpoint - a likely investor will nearly be able to name their terms given the situation.
Tuesday, March 10, 2009
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