The lenders to Jet Airways recently opened the stake acquisition offer by Etihad Airways, only to find a letter of interest instead of the speculated binding bid. To top it off, the Abu Dhabi-based airline posed some stringent prerequisites to help with the revival of the embattled Indian carrier.
Among its demands, Etihad has called for substantial write down of Jet Airways' Rs 9,000-crore debt, a report by the Business Standard said. Although it has not spelled out the extent of the haircut Jet's lenders should take, the amount could be substantial.
As the Jet Airways account is set to become a non-performing asset, several banks have already made provision for bad loan in the March quarter of FY19. This list includes the lead lender, State Bank of India, ICICI Bank, Canara Bank, Syndicate Bank and Yes bank. Other lenders are expected to do the same, the report added.
Moreover, Etihad has assigned the responsibility of finding a majority investor to run Jet Airways to its lenders. The Arab aviation major had clarified last week that it would not be the sole investor in the debt-ridden airline.
Etihad already has got one of its wishes, with Jet founder Naresh Goyal and his nominees no longer a part of the company's board.
Despite the stiff conditions imposed by Etihad, bankers are hopeful that all will be well. The report quoted an SBI executive as saying that due diligence on Etihad's offer has begun and the situation will be clear within two to three days. "Hope is not lost," the senior banker was quoted as saying in the report. However, some see this as a sign that Etihad might want to negotiate further.
Etihad, which already holds 24 per cent stake in Jet Airways, had presented its bid for stake purchase in Jet Airways as the bidding process was about to end. Furnishing its bid, Etihad had said that India is one of the fastest-growing air transport markets in the world, and a significant economic partner of the UAE. Etihad has been working consistently with key stakeholders in India over the past 15 months to help find a solution which would ensure Jet's return as a viable and competitive Indian airline, and continues to do so, the airline further said.
SBI Cpaital Markets, the merchant banker overseeing the transaction, also received two more unsolicited bids. Instead of going for insolvency, Jet's consortium of lenders had opted for a stake sale in the airline in hopes of better returns.