New Delhi: Lenders to Jet Airways (India) Ltd on Thursday said bids for a stake sale in the cash-strapped airline will be invited on Saturday and that the Jet Airways stake sale will be completed in a time-bound manner. However, in the absence of satisfactory bids, lenders may explore initiating bankruptcy proceedings against Jet Airways.
The statement clears the uncertainty over Jet Airways' bailout plan after the Supreme Court on Tuesday struck down Reserve Bank of India's (RBI) 12 February 2018 circular for bad loan resolution.
Jet Airways’ lenders intend to pursue the bank-led bailout plan for a stake sale in the company under the present legal and regulatory framework and intend to invite expressions of interest, they said in a statement. The bailout plan will lead to lenders becoming the majority shareholders of Jet Airways.
“This will be invited on 6 April and will need to be submitted by 9 April. The lenders are cognizant that the outcome of the efforts will depend on the interest shown by the parties on sale of stake in the company," said the statement.
The decision was taken after lenders, led by State Bank of India (SBI), took stock of the Jet Airways’ operations as well as the regulatory developments.
While all efforts will be made for the Jet Airways stake sale, “other options may be considered if these efforts do not result in an acceptable outcome", the lenders said.
The statement, however, did not explain what were the other options, but taking Jet Airways to a bankruptcy court seems a logical one.
Jet Airways had last month said that its debt resolution plan, involving changes in the board composition and conversion of lenders’ debt into equity, was on the basis of the RBI 12 February circular.
That circular had set a six-month deadline for defaulting companies to put in place a rescue plan before lenders dragged them to bankruptcy courts. The apex court ruling this week that the instruction was ultra vires raised uncertainty over the agreed upon rescue plan. Lenders wanted to be doubly sure about their decision in light of the apex court ruling.
On Thursday, RBI governor Shaktikanta Das said that the central bank will issue a fresh circular on the issue. In the meantime, government officials and experts have said banks can take decisions that are in their best interest, in spite of the apex court decision. That could save agreed upon bankruptcy resolution plans such as Jet’s.
The airline is now waiting for the infusion of the ₹1,500 crore committed by lenders for paying aircraft lessors as well as for clearing part of salary dues.
The company also needs to quickly re-induct its grounded planes. The airline, which is operating about 26 aircraft out of its original 119 fleet, cannot afford to let its fleet to go below 20 aircraft without risking a government review on whether it can continue to fly international routes. Civil aviation secretary Pradeep Singh Kharola said that no such review is on at the moment.
Jet Airways had last month said it defaulted on repayment of an external commercial borrowing (ECB) it had raised for working capital needs due to temporary liquidity constraints and that it was in touch with the lender on the issue.
Kharola said Jet Airways has informed that its proposal of bringing 75 planes in operation stands and that the airline was in talks with the lenders.
“We are monitoring the safety and convenience of passengers," said Kharola.
On Thursday, Jet Airways shares rose 3.52% to ₹259.95 apiece on the BSE while the benchmark Sensex fell 0.49% to end the day at 38,684.72 points.