Mumbai: Jet Airways (India) Ltd founder Naresh Goyal, who was forced out of the troubled airline’s board in March following defaults on payments to banks and aircraft lessors, was planning a bid for the carrier at least as early as January, regulatory documents show.
Jetair Pvt. Ltd, a Goyal-owned company that is a general sales agent (GSA) to Jet Airways, agreed to provide the airline ₹250 crore as loan collateral, and considered investing in the airline at an extraordinary general meeting (EGM) on 14 January.
The company had submitted a bid for Jet Airways on Friday.
“Once Jet Airways finalizes its comprehensive resolution plan, (the) company is also contemplating investing in Jet Airways as equity partner," said the annex to Jetair’s special resolution passed on 14 January.
“The approval of shareholders of the company by special resolution is hereby accorded for making of loans(s) to and/ or giving of guarantee(s), and/ or providing of security(ies) and/ or to be taken by Jet Airways, of an aggregate outstanding amount not exceeding ₹250 crore," said Jetair’s EGM resolutions. This amount was to be given as security to Jet Airways to help it secure an overdraft facility.
The documents also said that in October 2018, the company had sold its investment in UPS Jetair Express Pvt. Ltd for a net post-tax value of ₹245.5 crore. “Over the last couple of years, the company has also been unlocking its investment in properties. Accordingly, the company now has investible funds to the tune of ₹400 crore accumulated through business profits and sale of properties and shares (UPS Jetair Express Pvt. Ltd)," the document said.
Jetair on Friday submitted a bid to buy Jet Airways from lenders who have put it up for sale, backed by companies in the US and the UK, The Economic Times reported on Monday.
Goyal holds 50.6% stake in Jetair. This includes 6.02% stake is in his individual capacity and 44.58% stake as a partner in National Travel Service, another company related to the Jet Airways group. Other stakeholders include Preeti Aggarwal (3.41%), Nirmala Goyal (0.07%), and three companies connected to the Jet Airways group. One of the shareholders—France Air Pvt. Ltd (16.74%)—is a company based in New Delhi, in which Jetair Pvt. Ltd owns 40% stake. The shareholding data is for FY17, the latest available.
Emails sent to Jetair and Jet Airways remained unanswered.
An email sent to the official email address of Naresh Goyal returned undelivered.
Jetair reported a net profit of ₹22.49 crore on revenue of ₹78.7 crore in FY18 and had a reserves and surplus pool of ₹149.84 crore in the same period.
In March, Goyal was forced to cede control of the airline that he had founded more than two decades ago, after Jet Airways, saddled with over $1 billion in debt, defaulted on payments to banks and aircraft lessors.
Since January, the airline has not paid salaries to a section of its staff, including pilots and engineers, while lessors have taken possession of planes after the airline failed to pay fees. Creditors to Jet Airways had extended by two days a deadline for potential buyers to bid for as much as 75% of the carrier to Friday evening.
Earlier this month, Mint reported that strategic bidders looking to invest in Jet Airways should have a minimum net worth of ₹1,000 crore or at least three years of experience in the aviation sector, citing documents seeking bids.
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For financial investors, the qualifying conditions are minimum assets under management (AUM) of ₹2,000 crore or at least ₹1,000 crore in committed funds for investment in Indian firms or assets.
On offer is a controlling interest, defined as 31.2%-75% of the equity capital, in India’s oldest surviving airline outside government control.
Mint had reported on 3 August last year that Jet Airways was facing several challenges, including a surge in fuel prices, weaker rupee and intensifying competition, and had approached investment bankers to help sell a stake in the carrier.
The planned stake sale did not materialize. And in March 2019, lenders led by State Bank of India agreed to take a 50.5% stake in Jet Airways and make a cash infusion of about ₹1,500 crore to tackle urgent issues faced by the carrier. However, the lenders have been releasing funds only in small amounts, which Jet Airways has found insufficient for running its operations.
This has severely affected the operations of the airline.
Jet Airways has suspended its international operations till 18 April. Its operating fleet has dwindled to seven, a fraction of the 119 planes it flew before its first default on 31 December.