Etihad-Hinduja deal could fly if Banks Hold 20% of Jet Airways Share
Banks may agree to acquire up to a 20 % stake in Jet Airways as the Hinduja group is not ready to exceed its shareholding beyond 30% in the grounded AAirline. In addition to this, sources close to the development said a day ahead of a crucial meeting at the Etihad headquarters in Abu Dhabi.
During the discussion, the plans were evaluated by the lenders’ consortium, led by State Bank of India, for the two years, banks will be holding the stakes. Subsequently, they can sell it and cash out.
“At this moment The Hindujas are unwilling to invest a considerable amount. In this particular scenario, banks will propose to hold the remaining 20% stake a limited number of years with terms and conditions, which will allow them to cash out after two years. Around 26% of ousted were Pledged by Punjab National Bank which previously owned by Naresh Goyal, Which made them second highest owner of Airline just after RBI
The Hinduja group is ready to meet top Etihad executives on Thursday in Abu Dhabi to discuss the deal. Senior executives of SBI will also be present at the meeting to be held at the Etihad headquarters.
While the interest from Hinduja is leading a positive side for the grounded Airline, executives of banks caution that there is no certainty that the deal will fructify. “The situation looks to be very difficult. The cost of recapitalizeJet as air transport is a booming business at this moment.
Despite being grounded for a while, the Airline has an expenditure of at least Rs120-130 crore per month while the AAirline is not earning anything. While NCLT is not a favored route, there will be no other doors left the bank executive said. Jet Airways has a liability of around Rs15,000 crore, which includes the bank debt of over Rs 8,500 crore. As part of the resolution process, lenders had invited bids to buy up to 76 percent in Jet Airways.