11 April 2019: India’s quasi-sovereign wealth fund, Etihad Airways PJSC and two financial investors have shown interest the Jet Airways stake sale, even as lenders to the ailing airline extended the bidding deadline by two days to Friday.
Private equity firms TPG Capital and Indigo Partners, National Investment and Infrastructure Fund Ltd (NIIF) and current Jet Airways shareholder Abu Dhabi-based Etihad Airways PJSC have submitted their expressions of interest (EoIs), a person with direct knowledge of the matter said.
“The lenders are currently waiting for EoIs from Air Canada and Delta Airlines,” the person said, requesting anonymity, adding the two carriers are likely to submit their initial bids in the next two days, meeting the new deadline set by the lenders.
The lenders originally set Wednesday evening as the deadline for submitting EoIs to buy a controlling stake of up to 75% in Jet Airways. This has been extended to 6pm on Friday.
“As part of the process, we are in receipt of some EoIs and some more persons have expressed desire to participate if additional time is provided. Accordingly, in order to allow better participation in the process the domestic lenders have agreed for extension timeline for submission of Expression of Interest which have been updated and made available on the websites,” SBI Capital Markets Ltd, the adviser to the consortium of lenders to Jet Airways said in a statement. The investment bank did not disclose the parties that have submitted their initial bids so far.
NIIF, Etihad, Air Canada and Delta Airlines didn’t respond to emailed queries.
A spokesperson for TPG Capital declined to comment.
Indigo Partners also declined to comment.
With Jet Airways in dire straits, the infusion of fresh funds by a new investor has become critical to stave off a potential bankruptcy.
Jet Airways has salaries pending since January to a section of its staff, including pilots, engineers and general managers. It has failed to pay plane lease rentals forcing lessors to ground a large part of its fleet. It has also deferred interest payments to banks and clearing dues with oil marketing companies.
Lenders to Jet Airways, led by the State Bank of India, have also modified the terms of the stake sale process by allowing restructuring of debt and permission to infuse funds into the carrier through loans.
Interested bidders would also have to provide solvency certificates before they submit their initial bids, according to the document issued to interested bidders, a copy of which was reviewed by Mint.
According to the document issued on 8 April, the lenders have now allowed “… restructuring of the existing facilities and infusion of funds by way of loans or acquisition/subscription of up to 75% of equity share capital of the company.”
Meanwhile, Indian Oil Corporation Ltd (IOC), which stopped supplying aviation fuel to Jet Airways earlier on Wednesday, resumed it from 8.30pm, a spokesperson for the state-run refiner said.
The spokesperson did not say why the fuel supplies had been restarted. The refiner stopped supplies as Jet Airways was yet to clear its fuel bills, the spokesperson said earlier.
Indian Oil had on 5 April stopped fuel supplies to Jet Airways but rescinded its decision within a few hours.
The SBI-led consortium took control of Jet Airways in late-March, promising to throw open a bidding contest for a new investor that is expected to be completed in the current quarter.
The lenders had in February agreed to convert a part of Jet Airways’ debt into equity by agreeing to take a 50.5% stake in the carrier, nominate two board members and make a cash infusion of about ₹1,500 crore into the airline.
However, the lenders are yet to convert their debt into equity. The Supreme Court had earlier this month quashed the Reserve Bank of India’s (RBI) 12 February circular, which prescribed rules for recognizing one-day defaults by large corporates and called for insolvency action as a remedy.
The circular directed lenders to refer any loan account over ₹2,000 crore under the bankruptcy code if it was not resolved within 180 days of default.
On Wednesday, Jet Airways shares fell 1.59% to ₹263.40 apiece on the BSE while the benchmark Sensex shed 0.91% to end the day at 38,585.35 points.