HYDERABAD: It may not be over till it is over. That’s the message writ large on both lenders and employees of grounded Jet Airways Ltd.On Tuesday, as the airline’s lead banker SBI moved the NCLT bench in Mumbai, expectations banked on the one last shot remaining in the chamber: renewed interest from investors to bid for whatever is left of the airline.
“We couldn’t implement a resolution plan as there were no serious bids, other than one conditional offer. The NCLT process does offer a little hope, or the account could head into liquidation,” a senior banker told Express. He added the process could stretch 6-12 months, or longer if an insolvency professional (for liquidation) is appointed instead of a resolution professional. The waning market sentiment on Jet’s revival is evident on bourses, where the scrip fell nearly 50 per cent, touching a new all-time low of Rs 32 on BSE Tuesday.
Lenders’ optimism of a last-minute solution against all odds, is due to two reasons. One, the NCLT process grants incoming investors indemnity against any legal proceedings against the company. Sources said potential investors were wary of trouble ahead. Two, it also allows regulatory exemptions such as SEBI’s prudential norms on making an open offer. It may be noted that Jet Airways’ existing investor Etihad’s conditional bid sought waiver of an open offer, which lenders couldn’t commit to.
However, investors had sought over 80 per cent haircut and it will be interesting to see whether creditors, who rejected these very demands, will now agree to the same terms. Under the Corporate Insolvency Resolution Plan, at least 75 per cent of the consortium members have to approve the proposal, including the quantum of write-offs, debt restructuring and terms of repayment.
For Etihad, which plonked over Rs 2,000 crore six years ago, the investment will be a dud if Jet heads for liquidation. This will be upsetting not only for the UAE-based airline operator, but also for the Indian aviation sector as Etihad’s was the first foreign investment in a domestic airline when rules were eased in 2013.
Meanwhile, Jet Airways, in a statement on Tuesday, said two more directors, namely Ashok Chawla and Sharad Sharma, resigned, making the board fully vacant. “...In view of the Board continuing to be in non-compliance with the provisions of the Companies Act, no additional directors being appointed and the process of bank-led resolution plan not moving around,” it said.