CNBC-TV18: Bids invited from 4 little known suitors shortlisted for Jet Airways

3 June 2020: Only four out of twelve suitors that came forward to submit an Expression of Interest to acquire grounded airline Jet Airways have made the eligibility cut, as per people in the know.

CNBC-TV18 had earlier reported that Jet Airways received twelve Expressions of Interest (EOIs) in the latest round of bidding. However, most of them did not meet the eligibility criteria set out by the committee of creditors, said people in the know.

Four players have now been shortlisted to submit bids for the airline, and have been asked to submit binding bids by July 11, CNBC-TV18 has learned. These include UK-based Kalrock Capital Partners along with an individual by the name of Murari Lal Jalan who is a resident of Dubai, people familiar with the matter told CNBC-TV18.

The second shortlisted player is another consortium comprising of Abu Dhabi based Imperial Capital Investments LLC (ICIL), Haryana-based Flight Simulation Technique Centre Pvt Ltd (FSTCPL) and Mumbai-based Big Charter Pvt Ltd (BCPL).

The third shortlisted player is a Canadian entrepreneur by the name of Sivakumar Rasiah, and the fourth player is Kolkatta based Alpha Airways, said sources who did not wish to be quoted.

Little is known about these four suitors that now remain in the fray for the airline. Banks CNBC_TV18 spoke to are not very confident of these EOIs getting converted into real bids, and say liquidation is a very real possibility.

This is the fourth round of bidding for Jet Airways, which was grounded over a year back and subsequently referred to the National Company Law Tribunal in June 2019 by its lenders.

The eight who did not make the eligibility cut included individuals Brijesh Singhla, Gladson Sabu Varghese, Jason Unsworth, Pramod Srivastav, Claude Bothello, as per sources. A consortium of Jet Airways employees also submitted an EOI, as did UK-based AdiGro Aviation and Turbo Aviation, said people in the know. Synergy Group was disqualified under Section 29A of the Insolvency and Bankruptcy Code, CNBC-TV18 has learned.

“The revised timeline for completion of the CIRP of Jet is now August 21, 2020, subject to any further extension of the lockdown by the state government of Maharashtra or the Central Government, as the case may be,” Ashish Chhawchharia, the Resolution Professional for Jet Airways said in an exchange notification earlier this month.

The airline has received claims of over Rs 37,300 crores under NCLT from various creditors. Of these, the resolution professional has admitted claims of over Rs 15,900 crores. This also includes claims of over Rs 8,000 crores from a clutch of banks led by State Bank of India, Yes Bank, Punjab National Bank and others.

Source: CNBC-TV18

LM: Jet Airways receives fresh EoIs ahead of the deadline

28 May 2020: The UK-based Kalrock Capital, Hyderabad-based Turbo Aviation, Alpha Airways and Canadian citizen Siva Rasiah are among the 11 investors who have submitted expressions of interest in the beleagured airline Jet Airways. The deadline for submitting EoI was reported to end on Thursday.

The employees consortium and the South American based Synergy Group have also submitted their interest in the company.

This is the fourth attempt by the airline’s resolution professional to find a suitor for reviving the ailing company. Previously, South American conglomerate Synergy Group and New Delhi-based Prudent ARC were given time to submit a resolution plan but failed to meet the deadline.

“While we have received several interests this time, we are yet to confirm who will qualify for the second round,” said a person aware of the matter. “The timing of these bids is interesting as it comes at a time when the airline industry globally is going through the worst crisis. So we need to verify who are the serious players among them,” he added.

Jet Airways was grounded on 18 April 2019 due to acute fund crunch. On 20 June 2019, the Mumbai bench of the National Company Law Tribunal (NCLT) admitted Jet under the Insolvency and Bankruptcy Code after lenders referred it to the bankruptcy tribunal.

The cash-strapped airline, which was grounded in April 2019, owes more than ₹8,000 crore to banks, with public sector lenders led by State Bank of India.

The resolution process for Jet Airways has been extended multiple times since the airline was admitted for insolvency resolution.

Earlier this month, fresh expressions of interest for the airline were invited and the deadline for submission was set for 28 May. The latest deadline for completion of Jet Airways’s insolvency resolution was recently extended to 21 August because of the ongoing lockdown.

In March, the National Company Law Tribunal (NCLT) had allowed 90 days’ extension for the corporate insolvency resolution process of the airline.

Despite its state of affairs, the grounded airline recently offered two of its Boeing 777 wide-body aircraft for evacuation operations of Indians stranded abroad under the Vande Bharat Mission.

Jet Airways could supply up to four aircraft for evacuation missions within a reasonable period of time, Ashish Chhawchharia, who was appointed as the resolution professional to carry out the insolvency process for the airline by lenders, wrote to corporate affairs secretary Injeti Srinivas, Mint reported.

Source: LiveMint

VCC: Hinduja Group loses interest in Jet Airways but two suitors still in fray

16 January 2020: UK-based Hinduja Group did not submit its interest for Jet Airways Ltd by the Wednesday deadline, a lender that is part of the airline’s committee of creditors told VCCircle, locking shares of the airline in the lower circuit band of 5% at Rs 47.75 on the BSE on Thursday.

On the brighter side, South America-based Synergy Group and New Delhi-headquartered asset reconstruction company Prudent ARC Ltd have put in their expressions of interest, the lender said.

Now, the binding bids have to be submitted by February 15.

In December, the committee of creditors called for a fresh round of expressions of interest, the decision coming after the National Company Law Tribunal (NCLT) approved extending the period for Jet’s insolvency resolution by 90 days.

The NCLT had also directed the creditors to expedite their decision on seeking fresh bids after two new undisclosed investors had shown interest in the grounded airline. By then, Synergy Group was the sole known potential bidder for Jet.

A senior executive at State Bank of India, leader of the 26-member banks’ consortium to Jet, is not too optimistic of the resolution plans so far. “We are yet to see the financial capability and strength of Prudent ARC and Synergy Group,” the person said.

Another SBI official said lenders were hopeful about Hinduja Group submitting an expression of interest but were disappointed that it opted out.

Foreign bidders will have to seek local partners as Indian regulations allow foreign companies to hold only 49% stake in airlines. Synergy is yet to find its partner under the resolution plan.

Moreover, Prudent ARC could also be rejected by lenders as the bidding entity needs to have minimum Rs 2,000 crore (around $282 million) worth of assets under management.

The Mint newspaper had last year reported that Hinduja Group was keen to buy Jet but wanted itself to be indemnified from the airline’s legal liabilities.

The airline’s debt stands at over Rs 8,230 crore (about $1.16 billion) while the total liability under the Insolvency and Bankruptcy Code (IBC) to employees, suppliers and other clients is over Rs 6,400 crore (over $900 million).

Once the second-largest airline in the country, Jet was grounded on April 18 last year after which the NCLT initiated insolvency proceedings in June on SBI’s plea.

In August, Jet’s insolvency resolution professional received three expressions of interest — from Volcan Investment, which is billionaire Anil Agarwal’s family trust; Panama-based investor Avantulo Group; and Russian fund Treasury RA Creator.

Volcan withdrew a day later and Avantulo wasn’t shortlisted for the next round of bidding, leaving Treasury RA Creator as the only selected entity.

After the initial August deadline, Brazil-headquartered Synergy Group, which owns a majority stake in Colombian carrier Avianca Holdings, showed interest in Jet. The group, controlled by Bolivia-born Germán Efromovich, is engaged in aviation, energy and telecom.

Jet was founded by Naresh Goyal, who is being investigated by government authorities for alleged diversion of funds. It has accumulated losses of more than Rs 13,000 crore ($1.83 billion).

VC Circle reported

FE: Jet Airways creditors file claims worth Rs 30,907 crore

20 September 2019: The total claims filed by creditors against Jet Airways has been updated to Rs 30,907 crore. As on September 6, the resolution professional (RP) of the grounded airline has admitted claims worth Rs 14,054 crore. The RP is yet to verify claims worth Rs 3,202 crore. An earlier notification on claims against Jet Airways showed that total claims stood at Rs 30,588 crore as on August 7. Financial creditors, including domestic and foreign banks, have dues worth over Rs 8,200 crore with Jet Airways.

The total claims amount has risen even as the Synergy Group, the sole suitor for the beleaguered Jet Airways, met with lenders of the airline earlier this week seeking a haircut on its existing debt.

On June 24, the RP had invited operational and financial creditors to file claims against the airline. Claims worth Rs 13,670 crore have so far been rejected, according to data on the airline’s website.

Jet Airways has been grounded for five months. It halted operations on April 17, after lenders refused to provide emergency funding to the airline. Slots belonging to Jet Airways have since been reallocated to other airlines. Following the grounding of Jet Airways, lenders of the airline, led by the State Bank of India, tried in vain to sell the airline.

On June 20, the National Company Law Tribunal (NCLT) initiated insolvency proceedings against the airline. According to the timeline set out by the RP, the resolution plan for Jet Airways is expected to be finalised for the NCLT’s approval by October 27.

The Financial Express reported

FE: Jet Airways: Synergy meets government officials to discuss airline’s revival

19 September 2019: The Synergy Group, the sole suitor for Jet Airways, met with government officials on Wednesday to discuss the revival of the grounded airline. The group, promoted by Bolivian-born German Efromovich, sought assurance from the government on recovery of Jet’s slots. The government sought clarity whether the group’s business proposal was compliant with Indian foreign direct investment (FDI) rules, sources said.

“Officials from the ministry of civil aviation (MoCA ) met with the group’s representatives on Wednesday. The Synergy Group mainly sought assurance on the return of Jet’s slots. In response, the government gave an assurance that reallocating the slots should not be an issue post March,” a person aware of the developments told FE.

The Synergy Group will also send a technical team to evaluate Jet’s assets, sources indicated to FE. The slots of Jet Airways, which has been grounded for the past five months, have been reallocated to other airlines till March 2020.

The government, however, has serious concerns on whether the investment from the Synergy Group will comply with Indian FDI rules, as the group is yet to find an Indian partner. As per the Indian FDI regulations, a foreign airline can directly invest up to 49% in a scheduled Indian carrier. However, the rule applies only to those entities which directly own an airline. If the foreign entity is an investment arm, private equity, fund, bank, or an industry conglomerate, FDI can go up to 74%, which is the maximum permissible investment that can be held by a foreign investor provided it is explicitly not an airline. “The Synergy Group has informed the government that it is looking for Indian partners and their legal team is looking for ways to resolve the concerns regarding FDI,” the source said.

Last week, FE reported that the resolution professional (RP) for Jet Airways has approached at least two Indian companies to partner with the Synergy Group to invest in the grounded airline. Independently, Synergy Group has also held talks with some Indian entities.

The Synergy group has also met lenders of Jet Airways including State Bank of India, IDBI Bank and Yes Bank this week. The group gave presentations to the lenders on their potential business plans with the airline. An adviser to the group had last month told FE that the group wants lenders to take a significant haircut. The Synergy Group also plans to run the airline at a much smaller scale than Jet’s earlier operations.

The financial creditors alone have admitted claims worth over Rs 8,200 crore with Jet Airways, data on the airline’s website shows. So far, creditors have submitted total claims against Jet Airways worth over Rs 30,000 crore, of which claims of over Rs 12,000 crore have been admitted by the RP. Jet Airways was grounded on April 17 this year and insolvency proceedings against the airline were initiated on June 20.

German Efromovich had in 2004 bought a bankrupt Avianca. The airline has since grown to become Latin America’s second largest. Earlier this year, Efromovich was reportedly removed from the board of Avianca Holdings for a loan breach.

The Financial Express reported

LM: Jet Airways’ future up in the air with Russian bidder set to be disqualified

9 September 2019: Chances of a late-stage revival of Jet Airways (India) Ltd have faded further, with Russian fund Treasury RA Creator on the verge of being disqualified, leaving South America’s Synergy Group as the sole suitor for the grounded airline.

Treasury RA Creator did not provide enough information about itself to Jet Airways’ insolvency resolution professional nor did it deposit the mandatory amount required to seek access to the airline’s data, making it ineligible to bid, the person cited above said on condition of anonymity.

“Though the committee of creditors (CoC) of Jet Airways is yet to take a call on whether to disqualify Treasury RA Creator, the company’s interest in Jet Airways, as things stand, is as good as being rejected,” said the person.

Meanwhile, lenders are still conducting due diligence on South American conglomerate Synergy Group Corp. after it showed interest in investing in Jet Airways. The company, which owns a majority stake in Colombian carrier Avianca Holdings, the second-largest airline in South America, is looking for a majority stake.

“There is only a slim chance that Synergy Group Corp. will be allowed to bid for Jet Airways,” the person said, adding that it cannot bid without support from an Indian partner, according to the current foreign direct investment (FDI) regulations.

At present, a foreign airline can own up to 49% stake in an Indian carrier, but cannot have controlling rights. Synergy Group is yet to approach an Indian entity to partner it in jointly bidding for Jet Airways.

The finance minister said in the Union budget that the government is examining proposals to ease the FDI cap in aviation. “Synergy is yet to make the mandatory deposit; so it’s difficult to open the data room for the company, though it is considered a turnaround expert in South America,” the person said.

Antonio Guizzetti, president of Washington-based Guizzetti and Associates, and legal adviser to Synergy Group on the Jet Airways acquisition, wasn’t available for comment.

Mint reported on 3 September that Synergy was ready to take a majority stake in Jet Airways, provided the grounded airline’s lenders agreed to take a deep haircut and convert their debt into equity.

“We are consulting lawyers and exploring (whether) Synergy Aerospace as a financial investor can take a majority stake, up to 51%, in Jet Airways,” Guizzetti had said in a phone interview.

A lawyer who specializes in aviation deals had told Mint that “a foreign non-airline can only nominate less than half the board members”.

“It will be difficult for Synergy Group to have a controlling stake in Jet Airways,” said the lawyer, requesting anonymity.

Access to prime slots at major airports, a stake in a profitable frequent-flyer programme and a few relatively old planes appear to be the only assets before a potential bidder.

Germán Efromovich, founder and chief executive of Synergy Group, will travel to India on 15 September to meet the lenders of Jet Airways.

“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 had said in the interview.

Jet Airways suspended operations in April due to a severe cash crunch. A consortium of 26 banks led by the State Bank of India has approached the National Company Law Tribunal to recover dues of more than ₹8,500 crore. Lenders have been trying to sell the airline as a going concern for the past five months.

The LiveMint reported

RT: Jet Airways’ creditors to recover only $300-$400 mln in liquidation scenario

4 September 2019: Creditors of India’s bankrupt Jet Airways are likely to recover less than 10% of the carrier’s total outstanding dues in a liquidation scenario if no suitor succeeds in buying the airline, two sources told Reuters.

The airline’s financial and operational creditors, who are owed nearly 300 billion Indian rupees ($4.20 billion) are likely to recover only $300-$400 million from the sale of Jet’s assets, the sources, who have direct knowledge of the matter, said.

“The expected recovery on owned planes and real estate is $300-400 million after repaying debt tied specifically to those assets,” said one of the sources.

The sources, who asked not to be named as they have not been cleared to discuss the matter with media, said Jet currently has some four to six Boeing and Airbus aircraft, and some real estate assets in India, on which there are some outstanding dues.

The airline, less than a year ago, was operating a fleet of more than 120 planes that flew to dozens of domestic destinations and international hubs such as Singapore, London and Dubai.

Once India’s biggest private carrier, Jet stopped flying in April after running out of cash, leaving thousands without jobs and pushing up air fares across the country. It was admitted to bankruptcy court in June after its lenders, led by State Bank of India, failed to agree on a revival plan.

The court-appointed resolution professional, now responsible for the company, declined to comment and said that the focus remains on resolution and not liquidation at this stage. ($1 = 71.4920 Indian rupees)

As reported by Reuters

ET: NCLAT asks Jet Airways IRP to cooperate with Dutch Court Administrator

4 September 2019: The National Company Law Appellate Tribunal (NCLAT) has directed the Resolution Professional of Jet Airways to cooperate with the Dutch Court Administrator, which is also conducting insolvency proceedings against the debt-ridden carrier.

A three-member NCLAT bench headed by Chairman Justice S J Mukhopadhyay has asked the Interim Resolution Professional (IRP) to place before it a draft agreement with terms of condition between him and the Dutch Court Administrator in next two weeks.

During the proceedings, the Committee of Creditors (CoC) informed NCLAT that it was ready to cooperate with the Dutch Court Administrator.

“IRP has to collate the claims of the all financial creditors and operational creditors, domestic or internationally,” said NCLAT.

It also said,” IRP is bound to take control of assets.”

NCLAT also said IRP may consult the CoC before finalising the draft. It listed the next hearing for September 20.

On August 21, NCLAT had asked the CoC of Jet Airways whether it would cooperate with the Dutch Court Administrator. It had then listed next hearing for September 4.

The appellate tribunal’s direction came while hearing a petition filed by the Dutch Court Administrator against the order of the Mumbai bench of the National Company Law Tribunal (NCLT), which had declared overseas bankruptcy proceedings null and void in the Jet Airways insolvency case.

On July 12, NCLAT had stayed the orders of NCLT on the plea filed by the Dutch Court Administrator and agreed to hear it.

The appellate tribunal had said that it will clarify the law on action to be taken when there are two insolvency petitions filed against the same company in two different countries.

The Dutch Court Administrator has also agreed before NCLAT not to sell the confiscated assets of debt-ridden Jet Airways.

Jet Airways is facing insolvency proceedings in the Netherlands and was declared bankrupt in response to a complaint filed by two European creditors. In April, H Esser Finance Company and Wallenborn Transport had filed a petition citing unpaid claims worth around Rs 280 crore.

Following this, a trustee in charge was appointed by the Dutch court and it had approached its Indian counterpart for access to the financials as well as assets of the airline.

One of the Jet Airways aircraft, parked in the Schiphol Airport in Amsterdam, has already been seized.

The grounded airline owes more than Rs 8,500 crore to lenders. It also has a large debt by way of accumulated losses to the tune of Rs 13,000 crore, vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore. The consortium of lenders is led by SBI.

The Economic Times reported

FE: Hope for Jet Airways: Synergy group looks to invest up to Rs 3,000 cr in airline

30 August 2019: Synergy Group, a South American entity, which holds a significant stake in Columbian Avianca Airlines, is willing to invest up to Rs 3,000 crore in the grounded Jet Airways. The investment is conditional on the lenders of the airline taking a large debt haircut, Antonio Guizzetti, one of the advisors to Synergy Aerospace said.

German Efromovich, the owner of the Synergy Group, will meet the State Bank of India within the next two weeks to present a business plan. “Jet Airways is a good company, but it is grounded, which is very difficult to rehabilitate. Our desire is to negotiate with the banks for conversion of debt to equity,” Guizzetti said.

Financial creditors have claims worth over Rs 8,200 crore due with Jet Airways. Efromovich had in 2004 bought a bankrupt Avianca. The airline has since grown to become Latin America’s second largest. The Synergy Group is looking for an Indian co-investor, and it has engaged legal experts to see whether the entity can own more than 49% stake in Jet Airways.

“How much stake Synergy Group can pick up is under discussion with our lawyer, because the 49% limitation in foreign ownership is applicable for an airline operator. But the investment into Jet Airways will be done by Synergy Aerospace as a foreign entity,” Guizzetti said.

As per the Indian foreign direct investment (FDI) regulations, a foreign airline can directly invest up to 49% in a scheduled Indian carrier. “However, the rule applies only to those entities which directly own an airline. If the foreign entity is an investment arm, private equity, fund, bank, or an industry conglomerate, FDI can go up to 74%, which is the maximum permissible investment that can be held by a foreign investor provided it is explicitly not an airline. If Synergy group invests in Jet Airways, they would have to disclose where the money they invest is coming from,” Mark D Martin, CEO, Martin Consulting, said

Lenders are currently evaluating the group’s credentials. “These are very early days. It is hard to tell whether lenders will entertain Synergy Group’s proposal. The owner had some solvency issues in the recent past. Lenders will meet Efromovich in person and see how to take things forward,” a person involved in the proceedings said.

Earlier this year, Efromovich was reportedly removed from the board of Avianca Holdings for a loan breach. The Bolivia-born entrepreneur offered up to his 51.5% stake in Avianca as collateral on a $456-million loan from United Continental Holdings, the parent company of American carrier United Airlines. He eventually defaulted on the loan, putting Avianca’s future at risk.

Efromovich has since put in an offer for Italian carrier Alitalia, which was rejected. He has been looking to invest in India, either in Air India or Jet Airways. If the deal goes through, the Synergy Group to revive Jet as an international low-cost carrier. The group plans to inject significant working capital as well as new capital investment to expand Jet’s fleet, Guizzetti said. Efromovich declined to comment in an email response to FE.

Jet Airways has been grounded since April 17 after lenders refused to extend emergency funding to the airline to continue with its operations. The slots assigned to Jet have since been reallocated to other airlines. On June 20, the National Company Law Tribunal admitted the airline for insolvency proceedings. According to the company’s website, creditors have filed claims worth over Rs 30,000 crore, of which claims of over Rs 12,000 crore have been admitted so far.

The Financial Express reported

BQ: Leaked Video of Chairman’s ‘Bankrupt’ Flub Sends Avianca to Record Low

27 August 2019: Avianca Holdings SA plunged to a record low after the Colombia-based airline’s chairman was seen in a leaked internal video telling employees that the company is “bankrupt.”

The stock dropped as much as 15% in Bogota trading before paring losses. Kriete was trying to reiterate to employees the urgency of getting back to profitability, said Carlos Enrique Rodriguez, head of equity research at Bogota-based brokerage Ultraserfinco. Instead, his comments wiped out more than $40 million of market capitalization, as the video surfaced on social media after markets closed yesterday.

The company quickly tried to qualify the statement, taken from a video in which Chairman Roberto Kriete is seated aside CEO Anko van der Werff at a company meeting, saying his message was taken out of context.

Kriete “used the colloquial term ‘bankrupt’”, though the company is not in any bankruptcy or insolvency process, the airline said.

A new management team, led by Kriete, who took over as chairman in May following a corporate shakeup, is attempting to turnaround the money-losing airline by cutting unprofitable routes, selling some assets and reducing debt.

The Bloomberg Quint reported