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Jet Airways lenders to meet today. May vote on two final bids

While both the suitors have made final tweaks to their proposals and little may separate them, the Kalrock Capital-led consortium is said to have its nose ahead in the race to own Jet Airways

September 28, 2020 / 12:22 PM IST
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The Committee of Creditors of Jet Airways will meet on September 28, in what everyone hopes will be the lenders' final gathering to select the next owner of the airline that was grounded in April 2019.

The anticipation has been building up since the past fortnight when it came to light that the resolution professional overseeing the insolvency process has asked the two suitors to make final revisions in their proposals.

The airline had received bids from two suitors, both consortiums, on July 21. The first consortium was of Flight Simulation Technique Centre Pvt Ltd, Big Charter Pvt Ltd, and Imperial Capital Investments LLC. Both FSTC and Big Charter are led by aviator-turned-entrepreneur Sanjay Mandavia. Imperial Capital is an investment banking and wealth management company based in Dubai.

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The second bid was from the consortium of London-based financial services firm Kalrock Capital and entrepreneur Murari Lal Jalan.


If the buzz is to believed, the consortium led by Kalrock Capital may just have its nose ahead. But surely, in an insolvency race that has seen many ups and downs, including multiple extensions of deadlines, one can never say for sure.

"One doesn't know if the final decision will come on Monday itself. But for sure, the lenders want to close the case at the earliest," said a senior executive.

The 16th meeting

Jet Airways was admitted to the National Company Law Tribunal in June 2019, and since then the Committee of Creditors, or the CoC, has met 15 times.

Giving the intimation for the 16th meeting, the airline informed the exchanges on September 26, saying, "We wish to inform that the sixteenth meeting of the CoC of Jet Airways is scheduled to be held on September 28, at 11 am, for which notice to the members of the CoC has been sent on September 26."

State Bank of India is lead lender and the most prominent member of the CoC. Jet Airways owes banks nearly Rs 8,000 crore. Its total claims, which includes unpaid salaries of employees and dues of vendors, amount to about Rs 25,000 crore.

Given the high claim, there is no doubt that much of the revision in proposal details, has been on the financial aspect of the bids presented by the two suitors.

While both the sides have been tight-lipped, sources told Moneycontrol that many of the questions have also been regarding the suitors' proposal to repay lenders and clear dues of employees.

"Both the suitors have been repeatedly asked about their plans for the employees. Consulting firm Alvarez & Marsal has been looking into the resolution plans submitted by the two sides," said a senior executive close to the development.

Now that the final touches have been made to the plans, the two proposals will be voted by the CoC.  In a statement on August 20, Ashish Chhawchharia, the resolution professional overseeing the process, said the CoC was engaging with the two suitors to assess the feasibility and viability of their respective plans for the airline.

"Once this assessment is complete, the CoC shall vote on the resolution plans... For any plan to be considered approved, it will need to secure the votes of at least 60 percent of the CoC members," the resolution professional had said.

The two proposals

Initially, the two proposals varied. The consortium led by Sanjay Mandavia, a former captain at Jet Airways, plans to re-launch the airline concentrating on the domestic operations.

Mandavia, who is also on the verge of launching regional airline FlyBig, needs Jet Airways to complete his aviation vision. Mandavia will serve the metro routes with Jet Airways, which will be fed by the regional flights operated by FlyBig.

Launching domestic operations looked like a viable option as the industry and slowly but steadily scaled since it resumed operations in May after being grounded for two months during the lockdown. In August, domestic aviation industry continued on a recovery runway, with 28.32 lakh passengers taking to the air, up from 21.07 lakh in July.

Sources added that the consortium, apart from promising an initial investment of $100 million to revive the airline, had also shared plans to recruit former Jet employees.

On the other hand, Kalrock Capital-led consortium was initially said to have shared plans that had focused on international operations of Jet Airways.

Sources had earlier told Moneycontrol that the Kalrock Capital led consortium had also got the backing of investors and aviation industry veterans, including two executives who were part of the senior management at Jet Airways. This may include Nikos Kardassis, the former CEO of the airline, and considered close to founder Naresh Goyal.

But now, a senior executive from the industry noted, that plan may have been tweaked. "Kalrock Capital's plan now talks about initially re-starting Jet Airways operations on domestic routes, and then taking it international, as per the circumstances, given the COVID-19 challenges," said the senior executive.

With very little to separate them, the final call may depend on how much haircut each of the proposals expects banks to take.
Prince Mathews Thomas heads the corporate bureau of Moneycontrol. He has been covering the business world for 16 years, having worked in The Hindu Business Line, Forbes India, Dow Jones Newswires, The Economic Times, Business Standard and The Week. A Chevening scholar, Prince has also authored The Consolidators, a book on second generation entrepreneurs.
first published: Sep 28, 2020 07:44 am
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