Jet Airways
Etihad Airways has submitted a financial bid to the lenders of the grounded Jet Airways for taking part in the debt resolution programme. Reuters

A set of conditions that Etihad Airways has proposed with its binding bid for the revival of grounded Jet Airways is likely to further complicate the recapitalisation process, reports indicate. The Abu Dhabi-based carrier, which owns 14 per cent of stake in the grounded airline, has shown interest in reinvesting in Jet but warned that it cannot be the sole investor. Therefore, the lenders will have to find other investors to raise the bulk of the recapitalization requirements.

The United Arab Emirates (UAE) national carrier, which owned up to 24 per cent equity in Jet Airways before the debt restructuring, has made it clear that it does not want its stake to go beyond 25 per cent at which relevant laws mandate an open offer for acquiring a controlling stake.

"Etihad has made it clear that it's not up to it to find a partner. It's the responsibility of the banks that are running the process," a report in the Economic Times said, citing an unidentified person, who is close to the developments. Etihad made the offer just before the Friday deadline that the lenders' consortium led by the State Bank of India (SBI) has set for receiving binding bids.

The SBI Capital Market Ltd, which manages the recapitalization programme, received two other bids that were not considered serious as the bidders had not submitted their expression of interest (EoI). The three other entities that had been shortlisted after they submitted EoIs did not come up with financial bids. They were TPG Capital, Indigo Partners, and state-owned National Investment and Industrial Fund (NIIF).

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A Jet Airways aircraft prepares to land in the western Indian city of Ahmedabad. Etihad's conditions could prolong the revival of grounded Jet Airways. [Representational Image]Reuters file

"This is our last hope," a bank official close to the developments said after Etihad's bid arrived. SBI officials will meet on Monday to consider Etihad's offer, and it appears the search for another investor (or investors) may have to begin. The lenders may approach others who have submitted EoIs to partner with Etihad or find new potential investors, sources say.

"The next step is to see their conditions. There is a still a long way (to Jet's revival)," the report said quoting an unidentified person in the know. Jet requires at least Rs 15,000 crore be airborne again, considering the debt, dues to vendors and service providers and the additional capital needed to get the operations going.

The potential investors have been demanding that the lenders take an up to 80 per cent haircut on the Rs 8,500 crore debt. Reports say the SBI has an exposure of Rs 1,600 crore, of which Rs 1,200 crore has been provisioned as unrecoverable. Etihad also has been insistent that founder Naresh Goyal, who used to own 51 per cent stake in the airline which has been pared down to 24 per cent now, should not have a management role. A Supreme Court ruling on a Reserve Bank of India (RBI) circular on debt restructuring has also complicated the matters. RBI has to issue a new approval for the rescue plan to go ahead.