Jet Airways lenders lay out bid terms for up to 75% stake sale

Lenders to cash-strapped Jet Airways, led by State Bank of India (SBI), on Monday invited Expressions of Interest (EoI) for sale of up to 75% stake in the beleaguered airline.

In the past few weeks, the lenders are said to have been in talks with several investors including Tata Group, Adani Group, TGP Capital, Delta-KLM-Air France trio, Singapore Airlines, IndiGo, SpiceJet, Etihad Airways and National Investment and Infrastructure Fund (NIIF).

Sources said that quite many of these players have already initiated the due-diligence for the deal. However, the names of the players who participate in the bidding may be known only on Tuesday after the deadline for submission of EoIs ends. Some of the investors may not participate in the deal if they don't find it attractive enough after the due-diligence is completed.

The EoI document put forth by the lenders state that it is looking for change in control and management of Jet Airways. The consortium has proposed to offer at least 3.54 crore shares of the airline comprising 31.2% of equity share capital of the company and up to a maximum of 8.51 crore shares comprising 75% on fully-diluted basis, subject to approval, it said.

The rules for EoI state that the bidders can be strategic investors (SIs) and/or financial investors (FIs).

"SIs may include corporates having experience in similar sectors with domestic or global experience, or both. FIs may include private equity funds, investment funds, etc," it said, adding that SIs should have a minimum three years of experience in commercial aviation business.

In the event the bidder is a consortium, it should consist of not more than three members with shareholding of an individual member not being less than 15% and should also have a lead member.

However, the analysts question the way lenders have come out with the EoI, giving just two days for the interested players to participate. "It now looks that the airline is at the mercy of lenders. Even if one goes to purchase a flat, it takes more time. In this case, banks are asking the investors to take over a company which has debt of several thousand crores of rupees," said an aviation analyst, refusing to be quoted.

The Jet Airways lenders, in a statement issued on April 4, had said that the lenders intend to pursue the Bank-Led Resolution Plan for sale of stake in the company in a time-bound manner under the present legal and regulatory framework and intend to invite expressions of interest.

Further, the lenders continued that they are cognizant that the outcome of the efforts of will depend on the interest shown by the parties on sale of stake in the company. "Whilst all efforts will be made for the stake sale by the lenders, other options may be considered by the lenders should these efforts not result in an acceptable outcome" the statement continued.

STRUGGLING TO STAY AFLOAT

3.54 cr – Shares the lenders have proposed to offer, comprising 31.2% of equity share capital
8.1 cr – Maximum shares on offer, on fully-diluted basis