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Jet Airways crisis: Lenders expected to take final decision in two weeks

The SBI-led consortium of Jet Airways' lenders, currently busy hunting for new investors, is expected take a final decision on the fate of the grounded airline in the next two weeks before playing its last card, which is filing for bankruptcy

twitter-logo BusinessToday.In        Last Updated: May 28, 2019  | 12:40 IST
Jet Airways crisis: Lenders expected to take final decision in two weeks
The big question is whether Jet Airways can bag a new investor in the next two weeks

Jet Airways is now running out of time to regain its wings. The SBI-led consortium of 26 lenders, who are hoping to recover around Rs 8,500 crore from the grounded airline, is reportedly looking to take a final decision on the fate of the grounded airline in the next two weeks before playing its last card, which is filing for bankruptcy.

Meanwhile, the hunt for a new investor is on since that is a precondition for the National Infrastructure Investment Fund (NIIF) to come in and Etihad - Jet Airways' strategic partner with a 24 per cent stake - is not willing to increase its shareholding and wants additional suitable investors to provide the majority of Jet Airways' required recapitalisation.

People in the know told Mint that the banks do not want to end up as the controlling shareholder, but will be comfortable with a stake of around 30-35% depending on the final equity infusion by other partners. "Meanwhile, NIIF, which has shown interest in investing in Jet, has indicated that it will not be willing to own more than 20% in a revived Jet Airways, with the overall value of its investment not exceeding Rs 1,400 crore," a source said.

To woo investors, the consortium is even willing to take a hit. The source said that lenders have agreed to take a significant haircut if the situation demands in the coming days, further adding that any new investor is expected to seek anywhere between 80% to 90% haircut from the banks.

Last week, the Hinduja Group had said in a statement that it is evaluating the opportunity to invest in Jet Airways. The buzz is that although the Group has not yet approached lenders with a formal offer, there is a possibility of them making one in the coming days.

While founder Naresh Goyal and his family own 51 per cent of Jet Airways, 31.2 per cent have been pledged with the lenders. Once the banks convert the grounded airline's debt into equity, Goyal's stake will reportedly reduce to around 25 per cent, while that of Etihad would fall to 12 per cent. But now, with expectations of a new investor entering the picture, the shareholding patterns will change further. "In the new scheme of things, envisaged with the participation of new investors, Goyal's stake will finally fall to less than 10 per cent, which will reduce him to an ordinary shareholder," the source explained.

In the meantime, talks between Etihad Airways, the Hinduja Group and AdiGro Aviation to revive Jet Airways are in the final leg, Moneycontrol reported, adding that the binding agreements should be in place by June. Confirming this development, AdiGroup founder Sanjay Viswanathan told the portal that the firm is ready to put in Rs 2,500 crore for 24.9 per cent stake in Jet Airways. That will make AdiGro Aviation the single-largest investor, and in return for the funding, the firm wants Viswanathan as Chairman as well as the right to pick CEO and CFO.

On the other hand, Etihad has reportedly asked for key operational roles in the carrier while the Hindujas are expected to stick to their strategy of picking up key stakes in companies but leaving the operational aspects to professionals.

As the clock ticks down, the remaining employees of Jet Airways as well as its lenders will be keeping their fingers crossed.

Also read: Naresh Goyal deplaning: From Nirav to Mallya, why Indian businessmen flee to London

Also read: IndiGo Q4 profit surges 5-fold to Rs 590 cr amid Jet Airways turbulence

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