New Delhi: A lack of clarity on the impact of the Supreme Court order quashing the Reserve Bank of India’s (RBI’s) February 12, 2018, circular has delayed the stake sale process of cash-starved Jet Airways. Sources aware of the development said banks were still awaiting approval from the RBI on the legality of debt-equity conversion at Rs 1. As a result, the process of bidding, which was scheduled to start on Saturday, could not take off.
“All legal approvals from the RBI need to be in place including examination of the issue of debt to equity conversion. Unless legal work is done, the bid document cannot be issued,” said an executive of a bank which is part of the consortium. Earlier this week, lenders’ consortium had announced that expressions of interest (EoIs) from bidders would be invited on April 6. They had set April 9 as the deadline for receiving bids giving investors four days to respond.
Now, the deadline for submission of bids will also be extended as the process has been delayed. “Whenever the EoI is published, four days will be given to interested parties to respond,” the official said. The bid document could be issued as early as Sunday if the legal processes are completed by then. In that case, April 10 would be the deadline for submission of bids, the official pointed out.
On February 14, the Jet Airways board had agreed to a plan wherein a consortium of lenders led by State Bank of India would take over the airline’s debt and convert it into 114 million shares for just Rs 1, giving them a 50.1 percent stake in the company.
A delay in the resolution process will further worsen the financial condition of the airline which is left with a fifth of its original fleet. Its creditors including aircraft lessors are threatening to de-register more planes and oil marketing companies have started suspending fuel supplies to the airline. On Friday, Indian Oil Corporation had stopped supply of fuel to the airline for more than two hours due to non-payment of dues.
06/04/19 Arindam Majumder/Business Standard
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“All legal approvals from the RBI need to be in place including examination of the issue of debt to equity conversion. Unless legal work is done, the bid document cannot be issued,” said an executive of a bank which is part of the consortium. Earlier this week, lenders’ consortium had announced that expressions of interest (EoIs) from bidders would be invited on April 6. They had set April 9 as the deadline for receiving bids giving investors four days to respond.
Now, the deadline for submission of bids will also be extended as the process has been delayed. “Whenever the EoI is published, four days will be given to interested parties to respond,” the official said. The bid document could be issued as early as Sunday if the legal processes are completed by then. In that case, April 10 would be the deadline for submission of bids, the official pointed out.
On February 14, the Jet Airways board had agreed to a plan wherein a consortium of lenders led by State Bank of India would take over the airline’s debt and convert it into 114 million shares for just Rs 1, giving them a 50.1 percent stake in the company.
A delay in the resolution process will further worsen the financial condition of the airline which is left with a fifth of its original fleet. Its creditors including aircraft lessors are threatening to de-register more planes and oil marketing companies have started suspending fuel supplies to the airline. On Friday, Indian Oil Corporation had stopped supply of fuel to the airline for more than two hours due to non-payment of dues.
06/04/19 Arindam Majumder/Business Standard
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