Jet Airways Case: Etihad’s Demand For Open Offer Waiver Was Not Feasible, Says SBI
SBI chairman Rajnish Kumar has defended the lenders’ decision to opt for Jet Airways bankruptcy saying “it was their last effort to find a resolution”. (Source: PTI)

Jet Airways Case: Etihad’s Demand For Open Offer Waiver Was Not Feasible, Says SBI


The State Bank of India on Friday said Etihad Airways PJSC had sought waiver of open offer and assurance of flying slots for acquiring Jet Airways (India) Ltd., but the lenders to the crisis-hit carrier had no authority to accommodate the relaxations sought.

SBI chairman Rajnish Kumar had on Thursday defended the lenders' decision to opt for Jet Airways bankruptcy saying "it was their last effort to find a resolution" for the grounded airline and also did not rule out the possibility of liquidation.

Earlier this week, an SBI-led consortium of 26 lenders decided to take Jet Airways to the National Company Law Tribunal for bankruptcy proceedings under the Insolvency and Bankruptcy Code as they had received only a conditional bid from the Etihad-Hinduja combine.

In a filing to the stock exchanges on Friday, SBI said with the financial situation of Jet Airways being weak, lenders were continuously trying for viable resolution for last one year on account of operational losses.

ln this regard, it added, reputed consultants SBI Capital Markets and McKinsey and Co. Inc.—were roped in as process advisers/advisers. lt was also decided to initiate a bidding process to bring in new investors, SBI said.

As part of the bidding process, Expressions of lnterest for Jet Airways were sought from interested participants. Etihad, National Investment and Infrastructure Fund, TPG Capital and Indigo Partners had expressed their interest on April 10. The bidding process closed on May 10.

After closure of the bidding, as no binding bids were received, discussions were held with Etihad Airways and other prospective investors to find a way for infusion of funds, SBI said.

"Etihad had sought certain relaxations viz. waiver of open offer, assurance of flying slots, etc. As the lenders did not have any authority to accommodate some of the relaxations sought by Eithad it was not considered feasible to negotiate on the conditions laid by Etihad," SBI said in the filing.

Since a sustainable resolution plan could not be devised and two operational creditors had already approached the NCLT, "the member banks agreed in-principle, to approach NCLT, pursuant to the statutory right available to them" under the Insolvency and Bankruptcy Code, 2016.

Accordingly, an application for Corporate Insolvency Resolution Process was filed with NCLT Mumbai on June 17, it said.

"That bank is only a lender to Jet Airways (India) Ltd. and is not involved in or responsible for the management of the affairs of the said company,” SBI said.

“It is the responsibility of Jet Airways (lndia) Ltd. to disclose required information under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," the bank added.

Also read: Why Jet Airways Didn’t Hurt Like Kingfisher Shutdown

The state-own bank also said that initiation of instant lnsolvency proceedings is just a step for resolution/recovery under the statutory right available to the lenders.

Jet Airways, which was grounded on April 17, owes more than Rs 8,500 crore to banks. It has a much larger debt pile—Rs 13,000 crore in accumulated losses, Rs 10,000 crore in vendor dues and salary dues of over Rs 3,000 crore.

On Friday, Jet Airways shares rose 13.20 percent to Rs 72.45 apiece on the BSE while the Sensex shed 1.03 percent to end the day at 39,194.49 points.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.