After declining to extend any emergency funding to Jet Airways, lenders said Thursday they would focus on the bidding process to get an investor to handle the crippled airline.
However, with the airline’s share price falling 32.23% to Rs 163.90 on the stock market a day after the airline decided to shut down, the appeal process The airline’s offers and valuation may face hurdles, according to market sources. noted.
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The lenders, after due deliberation, have decided that the best way forward for the survival of Jet Airways is to obtain the firm offers from potential investors who have expressed an EoI (expression of interest) and have received offer documents on April 16, according to a spokesperson for the lenders. “Lenders have a reasonable expectation that the tendering process will be successful in determining the fair value of the business in a transparent manner,” a spokesperson for the lenders said.
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If the bidding process fails, banks will have to sue the airline in bankruptcy court – the National Company Law Tribunal (NCLT) – for an appropriate resolution plan or liquidation. If the airline goes into liquidation, the banks are unlikely to get much because there aren’t many tangible assets for loan collection.
Jet shares were the subject of intense sales as worried investors scrapped the shares as the airline’s recovery turned bleak after banks refused to provide emergency funding. “We don’t think it’s easy to revive an airline after it has closed. At least half a dozen airlines have shut down in the past 20 years, but none have been re-established. Even if a new investor comes in, they will have to inject huge funds, ”said veteran BSE broker Pawan Dharnidharka.
A Herculean task ahead for the revival of Jet Airways
It will be a Herculean task to relaunch Jet Airways which closed its doors on Wednesday. With no tangible assets and plummeting stock prices, it remains to be seen how many bidders will seriously bid for the airline. Lenders who have sunk Rs 8000 crore into the airline don’t have much choice. Many observers expect the airline to end up in bankruptcy court for liquidation.
The banks, led by the State Bank of India (SBI), which have an exposure of over Rs 8,000 crore, informed Jet Airways late Tuesday night that they were unable to review its request for funding. provisional critical. Bankers in the consortium were divided on the issue of financing Jet Airways. “The airline will turn to banks for more funds once the Rs 400 crore runs out in a few days. The bidding process to bring in a new promoter / investor will take at least two months. It was going to be difficult to bail out the airline on a daily basis. Almost half of the banks were against emergency funding, ”an official said.
Banks which have an exposure of over Rs 8,000 crore in the crippled airline were slow to release Rs 1,500 crore as promised in the resolution plan. The State Bank of India said this week that the bidding process for the “orderly sale” of the airline’s shares is currently being handled by SBI Caps and is being reviewed by the legal team. “Potential bidders will soon be shortlisted by SBI Caps,” said a spokesperson for SBI. “The conversion to shares proposed by the banks, if any, will be undertaken as a transitional mechanism to facilitate the bidding and selling process. “SBI is acting on behalf of the group of lenders as part of the bank-led resolution process,” he said.