Jet Airways: Etihad Submits Last Minute Binding Bid as Submission Deadline Ends

Moneylife Digital Team 10 May 2019

Economy & Nation

Even as Jet Airways received three bids including a last minute one by Etihad Airways, the ministry of corporate affairs (MCA) has ordered a probe by its serious fraud investigation office (SFIO) into the beleaguered airline and its subsidiaries over possible siphoning of funds by its promoters. Jet Airways owes banks over Rs8,400 crore and also has other liabilities to the tune of Rs5,000 crore, according to reports.

Etihad holds a 24% stake in Jet Airways (India), promoted by Naresh Goyal, and earlier had offered to sell its entire stake to SBI.

Lenders of the airline led by state-run State Bank of India (SBI) are currently in the process of selling the airline to recover their dues of over Rs8,400 crore.

Although Etihad Airways has shown interest in bidding, its spokesperson has said that it does not want to be the sole bidder for Jet Airways. These conditional bids indicate that there is no real hope on the horizon for the debt-ridden carrier.

Private equity firm TPG Capital, Indigo Partners, National Investment and Infrastructure Fund (NIIF) and Etihad Airways are in the race to buy a stake in the now grounded Jet Airways.

As per reports, a travel and tour operators association has approached lenders with an offer to invest Rs250 crore in the airline. Besides the association, a section of Jet Airway's employees and numerous domestic and international entrepreneurs have evinced interest in investing in the grounded airline.

Earlier this week, the pilots' union of Jet Airways approached the Supreme Court to direct the consortium of lenders to release funds required to restart operations.

Last month, Jet Airways was forced to announce a temporary suspension of all flight services as it was unable to maintain even bare minimum operations.

Prior to temporarily suspending all flight services, the carrier had already folded up most of its operations owing to the grounding of around 90% of its fleet by lessors, as the consortium of lenders refused to extend loans to the airline.

In April this year, lenders led by SBI had invited expression of interest (EoI) for a 75% stake in the debt-ridden carrier. The new buyer will also have to settle all existing debt of Jet Airways, as per a notice for inviting EoI.

In the notice on its website, SBI Capital Markets, a unit of SBI that is appointed as advisor to the 26 lenders, said prospective bidders of Jet Airways should submit their EoIs for up to 75% stake in the carrier by 6pm local time on 10 April 2019.

In March 2019, Jet Airways founder Naresh Goyal and his wife Anita stepped down from the board. The Goyals also agreed to reduce their stake to 25.5% from 51%.

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