Saturday, June 01, 2019

Banks reluctant to take large haircut on Jet

Mumbai: Lenders to Jet Airways are reluctant to agree to a restructuring proposal with a large haircut and debt conversion. Banks are seeing limited upside on a proposal where they will have to make large upfront provisions and wait for a long time for offloading the equity they will hold through debt conversion. This means that chances of lenders approving a restructuring package for the airline, without a government nudge, are low.

On Friday, SBI chairman Rajnish Kumar’s meeting with bureaucrats in the aviation ministry raised speculation of a new resolution plan for Jet Airways. Hardeep Puri, the newly-appointed minister of state with independent charge of aviation ministry was petitioned on social media by employees and customers of the grounded airline to help revive it.

Sources said that the proposal Hinduja group has in mind involves a huge haircut, fresh loans and partnership by Etihaad and one more financial investor. “They (Hindujas) are aware that there are no other bidders and that in an airline there is not much scope for recovery through the bankruptcy route,” said a banker. But despite not having alternatives lenders are reluctant as there is a likelihood of the airline coming under a probe by the Serious Fraud Investigation Office.
Besides the overhang of investigation, Jet Airways has seen an exit of top management. On Thursday the airline said that it was not able to approve its annual results due to the large-scale attrition in its board and senior management.
01/06/19 Times of India
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