Abu Dhabi-based Etihad Airways submitted its sealed bid to acquire a minority stake in Jet Airways with a lot of conditions that involved finding more investors. Lenders to beleaguered Jet Airways are reportedly disappointed by the Gulf carrier's bid and do not have a lot of hope for Jet's revival. The airline temporarily shut its operations on April 17.
Sources told The Times of India that lenders were unhappy with the bid that Etihad had submitted on May 10. "It is basically not a bid, it is essentially an expression of interest. Etihad wants lenders to find a majority partner to restructure Jet with it and it wants lenders to take a substantial haircut on their exposure of about Rs 9,000 crore to the grounded airline. And Etihad also wants an exemption from the open offer," sources said.
Etihad Airways said earlier that it could not put in more than Rs 1,700 crore in Jet. However, the magnitude of Jet's problems is so huge that it can only resume operations with an infusion of about Rs 15,000 crore.
A joint venture Indian airline cannot have a foreign partner with more than 49 percent stake, as per the substantial ownership effective control (SOEC). It also dictates that effective control of the airline must lie with the Indian majority partner.
An alternative
Apart from Etihad Airways, unsolicited bidders also submitted their offers to the lenders. They might now be considered as Etihad's bid was not appealing to the lenders. Sources told Mint that banks might now approach the entities who expressed interest in getting a stake in the cash-strapped airline after the formal process had closed.
Some of these bidders have also approached Etihad looking for a partnership with the airline.
State Bank of India reportedly received two unsolicited bids for the carrier.
Etihad, TPG Capital, Indigo Partners and India's National Investment and Infrastructure Fund (NIIF) submitted expressions of Interest in April for a stake in Jet Airways. "NIIF is evaluating the resolution process and may invest at a later date depending upon whether lenders are able to find enough investors," one source told the paper.
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