Jet Airways revival: Banks may dial govt-backed wealth fund NIIF this week

This is being seen as a significant step to rescue the grounded Jet Airways

Fresh talks are likely to kick off between the Jet Airways lenders and government-backed wealth fund NIIF this week in an attempt to strike a deal, according to people in the know. This is being seen as a significant step to rescue the grounded Jet, which has lost several top executives, key slots and a large part of its fleet already. 

On reviving talks between the National Investment & Infrastructure Fund (NIIF) and lenders, a source close to the development said a meeting could take place as early as Thursday. ‘’Whether or not the talks will convert into a deal would depend on Etihad’s conditions to re-invest,’’ he pointed out. A banking source said lenders would negotiate for the wealth fund to invest more than 20 per cent. In an earlier draft resolution plan, which failed to take off, the lenders had preliminary discussions on offering NIIF 19.9 per cent share as the second investor. 

Despite a possible dialogue with the NIIF, lenders are keeping the option open for a second round of bidding to find a majority investor for Jet, an executive at a public sector bank said.

‘’There’s no question of banks holding a substantial stake in Jet. There could be a second round of bidding by SBI Caps to find a buyer,’’ he added. 

The lenders were initially contemplating to hold a substantial stake in the company as finding a buyer for 76 per cent was a challenge. However, there was no consensus among lenders on this. 

A decision regarding a second bid would be taken after SBI Caps gauges interest from investors, another official in the know said. “SBI Caps has already started reaching out to prospective companies. 

Depending on their feedback, a decision regarding a second round of bid will be taken,” the person said.

The Abu Dhabi airline submitted its conditional offer on May 10, while wanting to be a minority investor in Jet. 

On Tuesday, Etihad top executives, led by airline veteran Cramer Ball, had a meeting with State Bank of India (SBI) on the various conditions set by the Abu Dhabi carrier. Lenders’ consortium, led by SBI, will need an endorsement from Etihad for any shareholder picking up more than 5 per cent stake in Jet, according to one of the conditions of the airline. Also, it has agreed to invest an additional amount of only Rs 1,700 crore in the airline through a proposed rights issue.

An Etihad spokesperson did not respond to a query on any discussion with lenders. 

When the Etihad offer letter was opened on Monday, it was found that there was no binding bid. Also, its conditions included putting the onus to find a majority investment partner in Jet on the lenders. It has also asked for a substantial write-down of the Rs 9,000-crore loans as a pre-requisite to operate the grounded airline.