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Virgin Australia bondholders have put forward a recapitalisation proposal for the struggling airline, seeking to knock out rival offers from two US private equity firms.

The proposal was lodged with Virgin’s administrator, a spokesman for the bondholders said on Wednesday, two days after Bain Capital and Cyrus Capital Partners made final and binding offers for the airline.

“Our plan offers a sustainable capital structure underpinned by public ownership to provide certainty and support the strong operating plan for the airline,” the spokesman said in an emailed statement.

The proposal involves a debt-to-equity swap among bondholders owed around $2 billion plus a fresh capital injection of around $1 billion, a person with knowledge of the proposal told Reuters.

Virgin Australia would remain a listed entity as part of the plan, which would allow bondholders to recoup around 70 cents on the dollar of their investment, the person said.

The 70 cent return is a future estimate based on expectations of share trading, a second source told Reuters.

The proposal would back the existing management team, honour full employee entitlements, customer travel credits and frequent flyer points, both sources said. They were not authorised to speak on the record.

Australia’s second largest airline entered voluntary administration in April owing nearly $7 billion to creditors, having struggled financially even before the coronavirus pandemic crushed travel demand.

Virgin Australia’s administrator, Deloitte, declined to comment. Deloitte had said on Monday after receiving the Bain and Cyrus offers that it hoped to select a preferred bidder by June 30.

Deloitte did not release financial details of those offers but said both planned to operate the airline as a smaller, single-branded domestic and short-haul international carrier with growth potential.

Virgin Australia competes against larger rival Qantas Airways Ltd in the domestic aviation market, which is an effective duopoly.