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The lenders of Jet Airways (India) Ltd are expected to make a final decision on the fate of the land-based airline over the next two weeks while they're looking for a new national investor, before moving on to the last option in the matter of bankruptcy.
Etihad Airways is willing to invest enough to maintain its stake of 24% and the National Infrastructure Investment Fund (NIIF) ready to commit only if a new investor agrees, the lenders have launched the search for a third investor, two the topic said.
According to the people mentioned above, who requested anonymity, the lenders still have not received an official offer from the Hinduja group, which had recently expressed interest in investing in the airline. The London-based group has not yet contacted lenders led by the State Bank of India (SBI), said these people, adding that it was possible for the group to make an offer in the coming days.
"The lenders have, for their part, agreed to cut their hair if the situation warrants it in the coming days. Any new investor should seek to get between 80% and 90% discount from banks, "said the first of the two aforementioned people.
On May 21, the Hinduja group announced that it was considering launching an offer to buy on Jet Airways, which has been stuck for more than a month. According to reports, the group has begun discussions with the existing investor of Jet, Etihad, for a joint bid, but has not yet made a formal offer or started the due diligence process according to the usual practice.
If all else fails, a final solution could include the removal of Jet Airways to the national company law court for bankruptcy proceedings. However, as part of the bankruptcy resolution process, lenders can only recover a fraction of the £ 8,400 crore that the company owes them.
Currently, the founder, Naresh Goyal, holds nearly 51% of the capital of Jet Airways, the rest being owned by public shareholders, including Etihad. Once the banks have converted the airline's debt into equity, Goyal's stake will increase from 51% to around 25%, while Etihad's stake will increase from 24% to 12%.
"In the new scheme of things, envisioned with the participation of new investors, Goyal's stake will eventually fall to less than 10%, which will bring him back to an ordinary shareholder," said the second person quoted above.
Under the foreign direct investment regulations, a foreign airline may hold up to 49% in an Indian airline with majority control vested in an Indian partner.
Although Etihad has expressed interest in the rescue of Jet Airways, it has refused to increase its stake from current levels after the banks have converted their debt into equity of € 1 per share. "However, the banks do not want to become the majority shareholder," said the second person quoted above. "They (the lenders) will be comfortable with a participation of around 30 to 35%, depending on the final capital injection by other partners. At the same time, the IFRS, which also expressed interest in investing in Jet, said that it would not be willing to hold more than 20% of the capital of a reactivated Jet Airways, the overall value his investment does not exceed 1,400 crore.
However, the investment of the IFRS is subordinated to the search for a third partner by the lenders. Similarly, Etihad stated that it could not be expected to be the sole investor and that, among other requirements, new qualified investors would be required to provide the majority of the recapitalization required by Jet Airways.
On April 16, Monnaie announced that Etihad, NIIF and private equity firms TPG Capital and Indigo Partners had been selected to launch binding bids for Jet Airways.
In addition, a group of minority shareholders and loyal travelers from Jet Airways turned to SBI Capital Markets Ltd, which manages the tendering process on April 25, to present a proposal to lenders to revive the airline company.
Depending on the terms of bid eligibility, strategic bidders seeking to invest in Jet Airways should have a minimum net worth of ¥ 1000 crore or an experience of at least three years in the industry. ;aviation.
For financial investors, the required conditions are a minimum badets under management of 2,000 crore or at least 1,000 crore of funds committed for investments in Indian companies or badets.
This article was first published on livemint.com.
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