The two sides differ over funding of the bid, and AdiGro Aviation is apprehensive about the insolvency process getting a timely resolution
All may be not well in the partnership between Jet Airways' employees' consortium and AdiGro Aviation, which had joined together in June to bid for the airline.
Sources told Moneycontrol that while the two sides differ on funding, AdiGro is also apprehensive about seeing a timely resolution via the insolvency process.
The setback comes even as the August 3 deadline to submit bids for Jet Airways looms. Till now, the Jet Airways' employees' consortium and AdiGro were the only suitors that had confirmed their interest in the airline.
While Etihad Airways and Hinduja Group are expected to submit a bid, an official statement is yet to come through. "It is over for all practical purposes," an executive said, adding: "The two sides differ over funding and there is little clarity on the source of funds."
While reiterating that AdiGro Aviation continues to be interested in the bidding, its founder Sanjay Viswanathan said, "We have asked the employee consortium to seek clarification from the resolution professional (RP) and Committee of Creditors (CoC) to ensure the process is completed by September 20 if AdiGro has to commit time, effort and money to this process."
"Alternatively, we have offered them (the employee consortium) the freedom to partner with any other equity sponsor who's willing to overlook this risk (of timely resolution)," Viswanathan told Moneycontrol.
Jet Airways, which had suspended its operations on April 17, has liabilities of about Rs 25,000 crore.The interestThe two partners had announced their intent on June 28 to bid for 75 percent stake in the airline through the National Company Law Tribunal (NCLT) process. The Jet Airways Employee Consortium includes The Society for Welfare of Indian Pilots (SWIP) and Jet Airways Aircraft Maintenance Engineers' Association (JAMEWA).
Of this 75 percent stake, AdiGro was to acquire 49 percent stake and the rest by the employees' consortium.
But now a bid from the two partners looks highly unlikely. "They seem to be lacking the financial wherewithal to place a bid," said another industry executive.
Viswanathan though countered, saying that AdiGro has 'committed capital'.
On the other hand, raising concerns about the insolvency process, he said, "We have seen every NCLT case being stuck in the higher court...If the RP and CoC can't give us or any bidder the confidence that they can deliver in 90 days (ie 20 Sept), no one can revive this airline."
"Unlike in a steel or cement plant , where even if it's mothballed for a year, you can reboot it, you can't do the same with an airline," Viswanathan added.Earlier this month, the RP had received claims of over Rs 25,000 crore for Jet Airways, but had admitted only a third of it.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.