The Fourth Round Of Bidding Will Be Jet Airways’ Final Call
Lenders to Jet Airways Ltd, grounded more than a year ago, are resigned to the fact that the airline is likely to end up in liquidation. Even so, they will try to sell it one more time.
The insolvency proceedings have not gone according to plan so far but the lenders have decided to open one last round of bidding before recommending liquidation, three people directly involved with the process told BloombergQuint.
While hope of securing a resolution plan for Jet Airways was always low, lenders were hopeful of the sale of a part of the airline’s operations. In January, the resolution professional for Jet Airways signed a sale and purchase agreement with Koninklijke Luchtvaart Maatschappij N.V. to sell its Dutch operations. One of the conditions of the agreement was to secure all legal and regulatory approvals. However, Airport Coordination Netherlands has now rejected the deal, which has led to the agreement becoming null and void, Jet Airways informed exchanges on Wednesday.
The sale would have infused some amount of capital into the Indian airline and made it more attractive for a bidder to purchase, the people quoted above said on the condition of anonymity. That now seems unlikely, they said.
Lead lender State Bank of India did not reply to an email sent on Friday. Resolution professional Ashish Chhawcharia did not respond to calls and messages.
On Wednesday, the Committee of Creditors invited expressions of interest from strategic investors with a minimum net worth of Rs 500 crore or minimum available funds for investment or deployment in Indian companies of Rs 500 crore. Financial investors who want to submit interest for Jet Airways must have assets under management worth at least Rs 500 crore, according to the bidding document uploaded on the airline’s website.
The qualifying criteria for the bidders has been lowered for the fourth round, as compared to the preceding round where the lenders were seeking strategic and financial with net worth or investible funds of over Rs 1,000 crore. The last round of EoI, concluded in February, with no bidder turning up.
Financial creditors to Jet Airways are owed Rs 8,232 crore, while operational creditors have outstanding dues of over Rs 7,300 crore, according to details available on the airline’s website.
The airline has been in trouble since December 2018, when lenders led by SBI got together to work on a restructuring plan. Their attempts did not yield any result and, in April 2019, Jet Airways was grounded.
In June 2019, the company was admitted under the Insolvency and Bankruptcy Code for resolution.
Since then, Jet Airways has seen initial interest from a Russian fund, a Panama-based financial investor, Anil Agarwal’s Volcan Investment, Synergy Group and Prudential Asset Reconstruction Company Ltd. However, none of these entities ended up submitting a final bid for the airline, pushing it closer to liquidation. Etihad Airways, which owns 26 percent stake in Jet Airways, has also declined to buy any further stake.