Mumbai/ New Delhi: London-based Hinduja group pulled out of the race for Jet Airways (India) Ltd, leaving only two contenders—South America’s Synergy Group and New Delhi-based Prudent ARC Ltd—in the fray to acquire the airline that shut operations in April last year, said two people with direct knowledge of the matter.
Synergy submitted its expression of interest (EoI) on 6 January and Prudent, an asset restructuring company, submitted its initial bid on Wednesday, the final day of submitting bids, the people said. With only two parties left in the fray, the revival of what was once India’s largest private airline appears to be an uphill task.
“Subject to the eligibility of the potential bidders, the lenders expect to get binding bids by 17 February," one of the two people said, requesting anonymity.
“Prudent ARC has submitted an EoI for Jet Airways. But its assets don’t meet the eligibility criteria of a minimum net worth of ₹2,000 crore," the second person added.
Ashish Chhawchharia, the resolution professional appointed by the lenders to oversee the sale proceedings, did not comment.
Industry experts said a revival of Jet Airways looks bleak with the current set of bidders and the carrier may have to be liquidated.
“It’s quite impossible to resurrect Jet Airways," said a Mumbai-based analyst at a global brokerage.
“There’s nothing left in Jet Airways to bid for. The only attraction, the slots, are already redistributed to other airlines, who will not let go without a fight," the analyst said.
Synergy had earlier this month submitted a fresh bid for Jet Airways. In a bidding process initiated last year, it emerged as the sole contender for Jet Airways, though the conglomerate did not make a binding bid after seeking several extensions.
Lenders to Jet Airways are, however, sceptical about Synergy’s bid because they doubt whether the conglomerate has the financial strength to complete the acquisition. They are also doubtful because neither has Synergy “put enough people on the assignment, nor made any statutory payment", the second person said.
While Synergy wants Jet’s lenders to take a huge haircut on the airline’s debt of over ₹8,500 crore, it will also need to find an Indian partner for the acquisition as mandated by India’s foreign investment rules. Another challenge is the financials of Synergy, which has seen some of the airlines it fully or partially owned shutting shop in the last few years. Controlled by Bolivia-born German Efromovich, Synergy is engaged in aviation, energy and telecom.
Jet Airways was grounded on 18 April 2019 due to a severe cash crunch. On 20 June, the Mumbai bench of the National Company Law Tribunal (NCLT) admitted Jet Airways under the Insolvency and Bankruptcy Code.
A consortium of 26 banks led by the State Bank of India has approached NCLT to recover the loans. Jet has a negative net worth and accumulated losses of more than ₹13,000 crore over the past few years.