Lenders of Jet Airways, led by the State Bank of India (SBI), are currently in the process of selling the airline to recover their dues of over Rs 8,400 crore. SBI is currently in management control of the airline. The airline lenders are trying to rope in an investor to resuscitate the airline and recover their money. Private equity firm TPG Capital, Indigo Partners, National Investment and Infrastructure Fund (NIIF) and Etihad Airways were shortlisted to submit their bids after they put forward their Expression of Interest (EoI).
But on May 10, the last date for submitting the binding bids, only Abu Dhabi-based Etihad Airways, which holds 24 per cent stake in crisis-hit Jet Airways, gave its offer and that too in the eleventh hour.
Etihad Airways thus became the only solicited bidder for a stake in the airline. But experts have found its bid unattractive for the lenders, because multiple riders are appended to it. Besides offering to invest just Rs 1,700 crore against the requirement of Rs 15,000 crore to revive Jet Airways, Etihad, has proposed to put the onus of finding a majority buyer on the lenders. Etihad also wants exemption from giving an open offer in case its stake goes beyond 26 per cent.
The ball is still in SBI’s court. Today some industry veterans believe that the grounded Jet Airways may have finally collapsed. But, the SBI Chairman Rajnish Kumar believes that it will take at least one more week or so for a clearer picture to emerge for the future course of the Jet Airways.
“Various options are being evaluated. Legal opinion is being taken. There are many investors who are showing interest. We have to see whether they have the money and the wherewithal. I think the clarity should emerge in a week’s time,” Rajnish Kumar said on Saturday. Asked if there are investors other than those who have submitted unsolicited offers, Kumar said that there are some but their seriousness will have to be checked.
The other two bids received for the airline were unsolicited. The lenders have also got an offer from a Mumbai-based business group.
Sensing that the options to revive the grounded airline are fast running out, a group of employees had on April 29 proposed to bid for management control of the airline. They claimed to secure a funding of Rs 3,000 crore from outside investors.The employee group comprises members of Society for Welfare of Indian Pilots (SWIP) and Jet Aircraft Maintenance Engineers Welfare Association (JAMEWA). The employee-investor consortium has asked SBI Caps to provide details about the level of debt post haircut by banks and restructuring. Jet Airways’ employees comprising members of airline unions have written to SBI Caps seeking asset and other financial details of the crisis-hit company for raising $700 million (Rs 4,917 crore) from a mix of domestic and foreign investors.
Among key financial details, they have asked as to how much stake investors will get after infusing $700 million and the fund requirements for running the airline for the next 24 months.
SBI Caps is the transaction advisor for the lenders of Jet Airways and managing the stake sale process for the debt-laden carrier.
“We would like to assure you that our resources are at your disposal if they can be of any help. Also, as understood by us during the meeting of 2nd May, we are actively working with potential Indian and foreign investors to secure equity-based funding commitment of $700 million,” Capt. P.P. Singh, Senior Vice President at Jet Airways, wrote to SBI Caps.
While the lenders are vetting various proposals, most of the top Jet executives, including its Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Company Secretary, have resigned from their respective positions citing personal reasons. Close on the heels of the resignation of the airline’s whole-time director Gaurang Shetty, Etihad nominee on the board Robin Kamark stepped down on May 16.