Almost a year after its collapse, along with its ambitions of going head to head with Australia’s two main carriers, Qantas and Virgin on mainland routes, a buyer for Regional Express Airlines (aka Rex) finally appears to be surfacing.
Earlier this year the federal government – the airline’s largest secured creditor – floated the idea of nationalising the airline if a suitable buyer could not be found by 30 June.
However, after a lengthy bidding process, where multiple entities expressed interest, it appears that a successful bidder will now be revealed within weeks.
While Anchorage Capital Partners is among the parties that submitted a proposal to buy Rex, so too is private equity rival Renaissance Partners.
As well as fending off international bids, Renaissance Partners wants to move Rex’s headquarters to Canberra and re-list the stock on the ASX.
If Rex is to be in the centre of the regions, Andrew Cochrane from Renaissance Partners believes that the airline needs to be in the middle of Australia.
“Canberra being in the centre provides the opportunity for a ‘hub and spoke’ approach to how Rex’s services can be repositioned and rescheduled,” Cochrane told ABC Radio this morning.
In addition to maintaining Rex’s existing routes, Cochrane said new routes will be explored based on Canberra’s position and potential timelines as the schedule is built out.
“We will renew the fleet in the fullness of time and that starts to present new opportunities, which could include Canberra to Cessnock, Canberra to Darwin or Canberra down into Northern Victoria,” said Cochrane.
“All of those locations are possible because of the nature of Canberra and it 24/7 operation.”
Cochrane told the market this morning that Renaissance Partners' Rex bid has a number of funding partners, including JP Morgan.
Renaissance Partners expects to repay the federal government the $130 million it invested to keep the airline afloat, while other creditors would be converted into shareholders.
Renaissance Partners is yet to have its bid formally reviewed by Rex’s administrators at EY and the government – which as the largest creditor will have the final say.
“The government has been a fine steward in gaining control as secured creditor, it’s now time for the government to grab hold of the promise of our plan for the best future for Rex, a future made in Australia,” said Cochrane.
However, Renaissance's proposal is understood to be too complex.
The firm made an initial bid for the airline last year but was rejected outright before the process got under way.
Given many of its planes are more than 40 years old, the regional airline will require a huge investment in new planes.
Meanwhile, other entities that have are understood to have expressed interest in taking out Rex include Perth-based HMC Group, the parent of Nexus Airlines.
