With an obvious paucity of interest in Jet Airways evidenced by the lack of bids up to the deadline on Friday, Etihad Airways’ bid for a minority stake in grounded Jet Airways is looking like the only realistic saviour for the carrier at this point.
While there were four interested parties who qualified when the bids for the debt-ridden airline were invited, including TPG Capital, Indigo Partners, Etihad Airways and the National Infrastructure Investment Fund (NIIF), only one – Etihad Airways formally submitted its bid.
In addition to this the lenders also received three unsolicited bids from UK-based entrepreneur Jason Unsworth, UK-based investment firm Adi Group and Jet Airways employees’ union, all of which weren’t shortlisted.
Jet is now 51 per cent owned by founder Naresh Goyal, 24 per cent by Etihad and the rest by the public.
Etihad, which clearly has a vested interest in this with its 24 per cent stake in Jet – which stopped operations on 17 April due to onerous debt estimated at around USD 1.2 billion – has come out looking like the only realistic offer for the beleaguered carrier.
But the Etihad offer, non-binding and subject to fulfillment of certain conditions by Jet’s lenders, faces enormous hurdles.
Among Etihad’s conditions, according to Livemint, is that the United Arab Emirates-based carrier wants an exemption from an open offer that may be triggered by a change in ownership structure of Jet Airways. More crucial is the condition that Etihad wants a commitment from the lending banks – chiefly the State Bank of India (SBI) Capital – on additional loans, once it infuses equity into the company.
In essence Etihad Airways has offered to maintain its 24 per cent stake in Jet Airways, infusing further equity in Jet Airways to the extent that its stake is maintained at the current level, once a majority buyer comes in.
Officials of State Bank of India are set to meet today to consider Etihad’s offer, but no definitive time frame on a decision has been offered.