Friday, September 06, 2019

Synergy ready to take control of Jet Airways after debt cut

Synergy Aerospace is prepared to take a 51% stake in Jet Airways (9W, Mumbai Int'l) but only if the creditors agree to a significant debt haircut and debt-for-equity swap, Synergy's legal adviser Antonio Guizzetti told Live Mint.

German Efromovich, the founder and Chief Executive of Synergy, is due to arrive in India on September 15 to discuss terms.

"We don’t know yet how much Synergy Group will be investing in Jet Airways as it will depend on how open and available the banks will be to a haircut and conversion of their debt into equity," Guizzetti said.

He added that the Brazil-based group was prepared to inject sizeable, although undisclosed capital into the airline to repay part of its post-haircut debts and provide working capital for the relaunch.

"Part of the equity infusion from Synergy will go to pay part of the debt, which will have to be discounted by banks and refinanced. The cash flow of new company for the next 12 months will be negative as we will need to order planes, hire new staff, negotiate with regulators and government on the return of slots, and also negotiate with international airports for slots. The airline would need a substantial working capital at the beginning, which will be invested by Synergy," Guizzetti explained.

Besides the ongoing discussions about the financial aspect of the transaction, it is currently unclear whether Synergy as a foreign entity could own an Indian airline. The law currently restricts foreign shareholding in airlines to 49% if the investor is also an airline. However, the restriction does not include financial investors. Guizzetti said that Synergy Aerospace would consider partnering with banks and possibly other Indian entities.
05/09/19 ch-aviation
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