The bidding process initiated by lenders of Jet Airways has technically failed because not a single entity submitted a binding bid as required by the SBI Capital Markets Ltd. (SBI Caps) on behalf of the consortium of lenders.
Etihad Airways might have responded by submitting its bid just before the 6 p.m., May 10, 2019 deadline, but it has clarified that its bid is purely conditional and not binding as made out to be.
With this, the lenders would have no problem in entertaining the already received two unsolicited bids if their proposals are anyway better than the one offered by Etihad.
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Till going to the press neither SBI Caps nor State Bank of India (SBI), which is leading the consortium of lenders, said anything on the contents of the bid received from Etihad. A detailed e-mail to Etihad yielded no response.
Etihad reportedly had committed investment of only ₹1,700 crore to retain its 24% holding in Jet Airways and had asked the banks for a one-time settlement of the loan which means the lenders would have to take a big haircut.
The Abu Dhabi-based airline is believed to have asked banks to find an investor who would pick up majority stake in the airline. The airline should be run by professional management, it said.
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As per rules, Indian entities only can have majority control in an Indian airline.
SBI is believed to be in talks with National Investment and Infrastructure Fund (NIIF), a joint venture between Government of India and Abu Dhabi Investment Authority, to join hands with Etihad Airways to revive the airline. NIIF did participate at the expression of interest stage but backed out of submitting a binding bid.
‘Lacking commitment’
Analysts said Etihad’s offer is lacking in commitment to revive the airline.
“Their sole objective is to sell the debt and go away,” said an analyst asking not to be named.
“The deal looks extremely cloudy and less likely to fructify as Etihad Airway’s commitment to revive Jet is lacking. The investment it is committing is not even enough to meet the fuel cost,” said Mark Martin, CEO and founder, Martin Consulting.
He emphasised that Jet needed a serious buyer who can transform the airline taking advantage of its executable assets such as routes, reworked maintenance contracts and a workforce which is reputed for its hospitality.
Make the revival difficult, an Enforcement Directorate probe had surfaced six years after Jet sold 50.1% stake in Jet Privilege to Etihad for $150 million. Analysts said some business rivals were at work so that they can benefit from the turmoil.
Jet Airways stock on Monday plunged 8.14% to ₹139.45 on the BSE.