South America’s Synergy Group Corp is planning to pick up 49 per cent stake in Jet Airways. It will discuss co-investment options with its lenders and infrastructure companies, the group’s advisor told Business Standard. Synergy Group Corp, which owns majority stake in Avianca Airlines, South America’s second-largest airline, submitted an expression of interest last week to revive the grounded airline.
It’s Bolivian born founder German Efromovich will visit India next month to discuss investment options with Jet’s lenders and Indian infrastructure companies. Government norms mandate that substantial ownership and effective control of an airline must rest with Indian citizens.
“We intend to structure the acquisition as a foreign company with 49 per cent stake. Jet Airways is publicly listed and we hope lenders would be willing to convert their debt into equity. We will also discuss partnerships with Indian infrastructure companies. We have several options,” said Antonio Guizzetti, president of consultancy G&A, which is advising the Synergy Group regarding the stake buy.
Jet Airways, which shut down in April following a cash crunch, had a debt of around Rs 8,500 crore. Ashish Chhawchharia, the resolution professional handling the airline’s insolvency, has received creditor claims of over Rs 30,000 crore and admitted claims of around Rs 12,000 crore.
“The amount of investment by the Synergy Group will depend on discussions and negotiations with banks and other creditors. In insolvency cases, it is common to negotiate for discount on debt,” he said.
Efromovich purchased Avianca, which went through bankruptcy in 2004. Since then, he has transformed it into the second largest airline in South America.
However, Efromovich is facing a crisis and had to step down from the chairman’s post of Avianca Holdings following a loan default. He is now waging a legal battle to retain control of his majority stake in Avianca after a loan default. The loan was taken by the Synergy Group by pledging its stake in Avianca as a collateral.
Guizzetti, however, claimed that the Synergy Group has the funds to bid for Jet Airways and added that a business plan is being prepared. Earlier this year, he said that Efromovich had offered to invest around 300 million euros for a 30 per cent stake in Alitalia, which is under administration. However, he lost out in the race.
“Efromovich has been looking to diversify his investments and had earlier looked at investing in TAP Air Portugal. He knows the aviation business well,” he said.
Meanwhile, owner of Jet’s headquarter Luckystar Private Holdings has reached a settlement with the resolution professional or RP of Jet Airways on the dispute of its headquarters. The RP has agreed to move out of the premises within 45 days.
A part of the deposit money given by Jet for the property will be refunded after deducting rent for the period it was occupied by the RP.
HDFC is seeking to exclude the property mortgaged by Jet from the assets of the airline that has been granted moratorium by the National Company Law Tribunal (NCLT). The matter could not be settled between both the parties amicably.