Jet Airways Lenders Get Lukewarm Offers From Bidders: Exclusive

Offers submitted by two bidders for the insolvent Jet Airways (India) Ltd. are being seen as low by lenders, who are currently engaged in negotiations with the interested parties, three people with direct knowledge of the matter said.

The offers made by the consortium of Kalrock Capital and Murari Lal Jalan and another consortium of Imperial Capital, Flight Simulation Technique Centre and Big Charter Pvt., would result in large haircuts for the financial creditors, two of the three people cited earlier said on the condition of anonymity.

The Kalrock Capital consortium has offered to pay up to Rs 1,200 crore to the financial creditors over ten years by issuing zero-coupon bonds, the two people cited earlier said. The second consortium led by Imperial Capital has offered to pay Rs 60 crore to the financial creditors over the first two years of operations, Rs 60 crore to operational creditors and invest Rs 480-500 crore into the airline, the people said.

Financial creditors to Jet Airways, led by State Bank of India, are owed Rs 8,232 crore while operational creditors have dues worth Rs 7,300 crore, according to details available on the airline’s website.

A spokesperson for Kalrock Capital, in an emailed response to BloombergQuint, confirmed that the company submitted a resolution plan but declined to comment on any media reports surrounding details of its bid until public disclosure is required under the IBC law.

Imperial Capital, Flight Simulation Technique Centre and SBI didn’t respond to queries mailed on Wednesday morning. Resolution professional Ashish Chhawcharia declined to comment.

While the offers have been low, the lenders aren’t inclined to reject them right away, the first of the three people cited earlier said on condition of anonymity. Lenders are keen on resolving the case, rather than liquidating the airline, this person said.

The lenders are mindful of the fact that the Covid-19 pandemic has hurt the airline industry, which will likely reduce the of a stressed airline, the second person said. Lenders are still trying to negotiate for slightly better terms than what the bidders have offered, this person said.

The winning bidder will receive at least 12 aircraft controlled by Jet Airways, which includes nine planes owned by the airline. The bidder will also control 49.9% share in the frequent flyers programme, which is owned with Etihad Airways. The deal also involves an experience pool of pilots, airline staff, engineers, etc.

This is the fourth round of bidding for Jet Airways under the Insolvency and Bankruptcy Code. The airline has been grounded for over a year. Previous attempts to resolve the stress within and outside the IBC framework have failed. As such, for the fourth round, the committee of creditors had to lower the eligibility criteria for more bidders to participate.

The fourth round started with a dozen companies submitting expression of interest for Jet Airways, after which the lenders shortlisted four potential bidders in June. After nearly a month of conducting due diligence, only two bidders submitted their bids.