Jet Airways' hopes of getting its wings back may end up pinned on only one potential buyer. Of the three entities that had expressed interest, Synergy Group Corp, Treasury RA Partners and Avantulo Group, the last one was dropped from the final list of bidder companies last week as it failed to submit eligibility documents. And now Treasury RA Creator, a Russia-based international financial organisation, is likely to get disqualified.
The Russian fund did not provide enough information about itself to Jet Airways' insolvency resolution professional nor did it deposit the mandatory amount required to seek access to the airline's data, making it ineligible to bid, Mint reported, citing a person in the know. "Though the committee of creditors of Jet Airways is yet to take a call on whether to disqualify Treasury RA Creator, the company's interest in Jet Airways, as things stand, is as good as being rejected," the source added.
As per the requirement set by Jet Airways' creditors, an eligible bidder must have a net worth of Rs 1,000 crore. However, for financial investors, the eligibility limit is Rs 2,000 crore. The shortlisted final bidders have to submit their final resolution plan by October 14.
Meanwhile, the committee of creditors is still conducting due diligence on Synergy Group Corp. The South American conglomerate owns a majority stake in Colombian carrier Avianca Holdings, the second-largest airline in South America, which has a codeshare agreement with Air India.
"We are consulting lawyers and exploring (whether) Synergy Aerospace as a financial investor can take a majority stake in Jet Airways," Antonio Guizzetti, president of Washington-based Guizzetti & Associates, legal adviser to Synergy Group on the Jet Airways acquisition told the daily last week. He added that the South American company is willing to pick up a 51 per cent stake in the grounded airline, as long as the lenders consent to take a deep haircut and convert their debt to equity.
However, as per the government norms, a foreign carrier can neither hold over 49 per cent stake in a domestic airline nor effectively control it. Even though financial investors can own a higher stake, the effective control of an airline stays with the Indian investors. This, of course, may change if the government takes a decision to ease restrictions on foreign direct investment (FDI) in aviation, as was proposed in the Budget. In the meantime, Synergy Group is yet to approach an Indian entity to partner with.
"Synergy is yet to make the mandatory deposit, so it's difficult to open the data room for the company, though it is considered a turnaround expert in South America," said the source. A clearer picture will emerge in the days ahead. German Efromovich, the Group's Bolivian-born founder, and CEO, is expected to visit India on September 15 to discuss investment options with Jet Airways' lenders.
The airline stopped operations on April 17 after it ran out of funds and was admitted to the Insolvency and Bankruptcy Code (IBC) proceedings in June. It has over Rs 30,000 crore of dues which are claimed by a long list of financial and operational creditors. In July, this number stood at Rs 24,887 crore, out of which Rs 1,380 crore worth of dues were rejected by the resolution professional.
The biggest pull for suitors is the airline's premium slots at domestic and international airports which have been temporarily given to rivals like SpiceJet, IndiGo and Vistara. Most of Jet's aircraft - over 100 - are already being repossessed by lessors, and the 16-odd planes owned by the carrier are under cloud over non-payment of dues.
Despite Jet Airways limited appeal for bidders, the lenders will be keen to avoid liquidation since they are likely to get only $300-$400 million (up to Rs 2,800 crore) from the sale of the airline's assets.
With Reuters inputs