Etihad flies in to rescue Jet, submits conditional offer for minority stake

Banks to decide on legality of two unsolicited bids

In a surprise development, Etihad Airways submitted a conditional offer to reinvest in the grounded Jet Airways on Friday just before the deadline ended for putting in binding bids. While Etihad’s offer has been declared as the only qualified bid, the Abu Dhabi-based airline made it clear that it would hold only a minority stake in Jet and that its bid was conditional.
 
Earlier in the day, State Bank of India chairman Rajnish Kumar at a press conference to announce the financial results had said he was expecting a serious bid, apart from the two unsolicited ones which had already been submitted, thereby building up a suspense. Kumar didn’t give out Etihad’s name but the conjectures had begun on who the surprise bidder was.
 
The bid from Etihad, which held 24 per cent in Naresh Goyal-founded Jet Airways, came in the last half an hour before the deadline on Friday. It hinges on multiple conditions, including availability of a majority partner, conversion of debt into equity and lenders agreeing to a substantial haircut to their exposure. In other words, Etihad’s bid is no guarantee that Jet could fly again, analysts pointed out.

Bankers said it was a last minute bid and they had not got a chance to see the finer details. While there’s been some discussion on debt to equity conversion, lenders to Jet are expecting to rope in a financial partner. SBI Caps, which has conducted the bidding on behalf of the lenders’ consortium, said banks would now examine the bid and also decide on the legality of two unsolicited bids which have been received. The unsolicited bids came from UK-based entrepreneur Jason Unsworth and a London-based firm Adi Partners. SBI Caps is expected to apprise lenders about the bid-related developments next week, a senior public sector banker said.
 
“Etihad Airways today confirmed its interest to re-invest in a minority stake in India’s Jet Airways, subject to conditions. India is one of the fastest-growing air transport markets in the world, and a significant economic partner of the UAE. Etihad has been working consistently with key stakeholders in India over the past 15 months to help find a solution which would ensure Jet’s return as a viable and competitive Indian airline, and continues to do so,” the airline said in a statement.
 
Other shortlisted bidders, including TPG Capital, Indigo Partners and National Infrastructure Investment Fund, did not submit binding bids on Friday.
 
Many lenders, including SBI and Syndicate Bank, have categorized loans to Jet Airways, which has remained grounded for about a month, as non-performing in the fourth quarter of the financial year 2018-19 and made provisions for it.
 
The slippages in the case of SBI were to the tune of Rs 1,220 crore for its exposure to Jet Airways.
 
According to bankers, the indicative pricing by bidder(s) would decide the extent of haircut lenders would have to take as part of the resolution package.