A consortium of Indian banks has reportedly agreed to a significant haircut of the debt owed by Jet Airways (JAI, Mumbai International) in order to facilitate investment by the Hinduja Group and Etihad Airways, Moneycontrol has reported.
The two potential investors have previously asked the banks to write off as much as 85% of Jet Airways' debt, which exceeds INR80 billion rupees (USD1.15 billion). While the consortium of creditors led by State Bank of India was initially reluctant to agree to such a haircut, it has now reportedly received a green light from the government to proceed.
It is unclear how big the haircut will eventually be.
The Hinduja Group, an Indian conglomerate, has previously sought assurances from the government related to the indemnity of the new owners for potential financial irregularities committed by the previous owner, Naresh Goyal. The Business Standard also reported that the investors requested that the government fast-tracks all necessary regulatory steps in order to allow Jet Airways to resume operations in mid- to late July 2019.
The investors also sought guarantees regarding the Jet Airways slots and traffic rights, which have already been mostly temporarily reallocated to other Indian carriers.
If the deal goes through, the Hinduja Group would likely take a just under 25% stake in Jet Airways. Etihad Airways would keep its 24% stake, while the Emirati sovereign wealth fund Mubadala Investment Company could take up to a 20% stake.
The Hinduja Group itself is reportedly planning to inject INR10-15 billion rupees (USD144-216 million) in fresh capital into Jet Airways.
Meanwhile, two minor suppliers, Shaman Wheels and Gaggar Enterprises, have filed to open Jet Airways bankruptcy proceedings. The Economic Times has reported that the filing has been submitted to the National Company Law Tribunal (NCLT) but is yet to be accepted. The banks have so far successfully managed to avoid formal insolvency or bankruptcy proceedings which could complicate the potential relaunch of the airline.
Besides slots and traffic rights, new investors will also have to restore Jet Airways' fleet. With most of its aircraft already repossessed, the ch-aviation fleets module shows that the carrier currently has only two owned A330-200s, two B737-800s, one B737-900, and one B737-900(ER) at its disposal. Seven B777-300(ER)s financed by EXIM Bank (United States of America) have been seized by the bank but formally remain owned by the Indian airline.
