UK's wealthiest people Hinduja Brothers will bid for debt-laden Jet Airways, sources said. The billionaires have obtained the assent of key stakeholder reportedly. The group is reportedly in talks with investment bankers led by SBI Capital Markets. The group has got backing of founder Naresh Goyal and Jet Airways strategic investor Etihad Airways. It may be noted that Jet Airways is running out of time as the staff and its pilots are being hired by rival airlines in India and abroad.
According to a report, the group will start the bidding process this week. It also mentioned that the lenders may be looking at paying off $30 million worth of dues to US Exim bank in a bid to free up six planes and resume limited operations. The report cited sources close to Naresh Goyal as saying that he shares a cordial relationship with the Hindujas. They further said that the Hindujas are expecting the banks to take a sizeable cut. It may be noted that Jet's dues are pegged at £1.2 billion. The report earlier stated that a consortium of lenders, led by State Bank of India, and Etihad wanted to rope in the Hinduja Group by offering a stake in grounded Jet Airways. The group, however, had not given any clear commitment in pumping funds into the debt-laden carrier initially.
The group, however, began showing interest after Etihad approached GP Hinduja, the elder brother, who leads the group. He, in turn, put the Abu Dhabi-based carrier in touch with Ashok Hinduja, the younger brother, who heads the India business.
Lenders plan to approach unsolicited bidders
Meanwhile, Jet lenders had opted for a stake sale in hopes of better returns. After receiving Etihad’s offer to buy partial stake, the lenders plan to come up with a new scheme to attract more investors. SBI Caps, which is the transaction advisor for the lenders and managing the stake sale process, is soon to come up with a fresh plan. According to sources, Etihad has shown interest to acquire a partial stake of around 24% in Jet which is one-third of the requirement. SBI Caps will chalk out the contours of the new scheme based on Etihad’s offer. “It (Etihad’s bid) is a bid, but it is not a complete bid. They are saying they are willing to participate, provided there is also someone who comes in. They have communicated their terms and conditions in their bid,” said a source.
Sources said after fresh shares are issued, Etihad’s stake will go down to almost zero, which is 24% now. Etihad has indicated it would like to retain 24% stake in the airline and has offered £170 million. Jet promoter Naresh Goyal has 51% stake in the airline, while 25% is the public holding. “They will contribute about one-third of the requirement. So the remaining two-third has to come from other investors,” the source said. By remaining at 24%, there will be no need for an open offer - a scenario Etihad was keen to avoid.
4 executives quit
Jet saw an exodus from its top management when four key executives put in their papers one after the other. The resignation of top executives, along with founder Naresh Goyal no longer being formally associated with Jet, has sealed the fate of thousands of employees. Chief executive officer Vinay Dube, deputy CEO and CFO Amit Agarwal, chief people officer Rahul Taneja and company secretary-cum-compliance officer Kuldeep Sharma quit after it became clear that Etihad’s offer to invest in Jet may not be sufficient to make the debt-ridden airline fly again, at least not anytime soon.
