Lenders to Jet Airways, have three options to recover their dues, even as they are unlikely to extend any additional credit to the country's second-largest carrier. The lenders, led by SBI, will not release cash until they have a look at the forensic audit report by EY on Jet's business viability. Jet, which defaulted on loan obligations last week, is currently under pressure to raise funds before it is classified as a nonperforming asset (NPA).
The first option is for Jet's founder-chairman Naresh Goyal to sell stake in the carrier before lenders initiate bankruptcy proceedings against it. Goyal reportedly has been in talks with his Abu Dhabi partner Etihad Airways for funds, but there are no profitable conclusions from that as yet. Goyal and his wife owns 51 per cent in Jet, while Etihad holds 23 per cent. The second option for lenders is to initiate insolvency proceedings against Jet once the loan becomes an NPA. If a company doesn't repay loans within 90 days, then, as under rules it is categorised as an NPA. Jet has repayment obligations of £650 million, extending till March 2021, while its total debt stands at £800 million.
The third option is to restructure the loans in agreement with the lenders. This will require Goyal to sell assets and cut costs. It will also require conversion of debt to equity as cash flows might not be enough to service the loans. However, actual business viability will be known only after EY submits its forensic report, the lenders said. For now, Jet has been offering up to 50 per cent discount on tickets to certain destinations for travel in the next months, to ease its cash flow.
