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Tuesday, 16 April, 2019, 12 : 50 PM [IST]

Naresh Goyal withdraws from race to bid for Jet; airline proposes complete suspension of operations with no aid from lenders

As per an ET report by Anirban Chowdhuy, a cluster of three companies said to represent Jet Airways founder Naresh Goyal has withdrawn from the bidding process for the distressed airline after Etihad Airways and TPG Capital threatened to walk out of the deal if Goyal was part of it.

Meanwhile, Jet’s management has proposed a complete suspension of operations to its board in an ongoing meeting as there is no financial assistance forthcoming from the airline’s lenders. Jet is just operating seven planes and paying fuel companies on a daily basis to operate flights.

Jetair, Goyal’s general sales agency that had birthed Jet Airways, backed by a Delaware based firm named Future Trend Capital and a London-based entity called Adi Partners had submitted their expression of interest (EOI) at 6:08 pm on Friday, eight minutes post the deadline for submissions.
They were told there wasn’t enough time to do due diligence.

SBI Caps will select the qualified bidders today. Etihad, TPG and Indigo Capital are among the entities that have submitted EOIs. State-run National Infrastructure and Investment Fund is expected to bid directly.

Etihad’s two key conditions to invest in Jet were Goyal’s complete exit and the exemption from a capital markets rule that mandates companies to put an open offer of 20% shares if it has acquired 25% in a company. Etihad owns 24% of Jet and has specified it wants to keep its shareholding at that level since there will be no exemption from that open offer rule. The airline which had last month said it won’t participate in a revival plan for Jet returned to talks after Goyal in a letter said he would relinquish all interest and control in the airline. He also resigned as chairman and board member, pledged 31.2% shares in Jet and agreed to pledge more. An EoI from him hence may have come as an unpleasant surprise for Etihad.

Jet needs an urgent cash infusion to survive. Its CEO Vinay Dube appealed to banks during the weekend for additional loans of INR 1,000 crore. The banks are sharply divided on further debt assistance to Jet. They instead put across fresh conditions including more pledged shares of Goyal and Jet’s owned planes as collateral for additional loans.

According to latest estimates, Jet owes over INR 3,500 crore to its lessors and vendors, and INR 3,500 to passengers for cancelled tickets. It has a net debt of INR 8,500 crore.
 
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