With immediate funding proving tough, the Jet board will meet on Tuesday morning to consider all options — including a temporary shutdown. “…the current status of our engagement with the lenders and other related matters shall be placed before the board in the meeting scheduled for tomorrow morning, where the management will seek guidance from the board on the next steps forward. We will keep you updated on all critical developments,” Jet CEO Vinay Dube told employees on Monday evening, adding that international operations would remain suspended until Thursday.
‘Rs 1500 crore may not be able to sustain Jet’
In a late evening statement, SBI said the bid process was being vetted by the legal team at SBI Caps and prospective bidders would be shortlisted soon. Sources, however, indicated that the lenders may back the funds if they found their bid attractive, a move that may come as a blow to founder Naresh Goyal and shareholder Etihad’s attempts to wrest control.
The two submitted separate offers last week with financial bids due to be submitted by the end of the month.
The discomfort of banks may be stemming from the reluctance of the two Jet shareholders to bring money on the table despite the airline being on the brink of collapse.
At Monday’s meeting with Jet, lenders suggested that the Rs 1,500 crore being demanded by the current management may not be able sustain the carrier for long and Goyal and Etihad may need to chip in as well, a senior banker told TOI. In any case, SBI chairman Rajnish Kumar said, lenders have been providing support to the airline to enable it to continue operations.
Kumar also said that SBI cannot decide on providing emergency funding as it was merely the lead bank and was acting on behalf of a group of lenders as part of the Bank Led Resolution Process. Sources indicated that banks may gain temporary control of the airline by converting their loans into equity.
“The proposed equity conversion by banks, if any, will be undertaken as a transitory mechanism to facilitate the bidding cum sale process. Necessary support to facilitate the process is being extended by the banks in the consortium. Cooperation by and support from all the other stakeholders will be the key to the success of the process,” the statement said.