The State Bank of India-led consortium of lenders has not rejected Etihad Airways’ bailout offer for financially stressed Jet Airways and is waiting for the Securities and Exchange Board of India’s (Sebi’s) decision on granting exemptions to the foreign player, SBI Chairman Rajnish Kumar said on Saturday.
Etihad, which holds a 24 per cent stake in India’s second-largest airline, has made an offer to invest only at Rs 150 per share, which is 53 per cent of Jet’s closing price of Rs 281.35 on Friday. The UAE-based carrier is also seeking an exemption from Sebi on preference pricing and open offer guidelines to invest more for the bailout.
“We are nobody to reject anybody’s resolution plan. We are saying that there is a regulation governed by Sebi. What we have to see is that what Sebi says,” Kumar said on the sidelines of an event at Gujarat International Finance Tec-City (GIFT City) in Gandhinagar. “If no regulatory exemption is required, then it is easier (to resolve). If a regulatory exemption is required, then they have to approach the regulator and we need to know the regulator’s view," he added.
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ALSO READ: Naresh Goyal sets terms for Rs 700-cr infusion into debt-laden Jet Airways
Jet owes over Rs 8,000 crore to the SBI-led consortium. The lenders are now wary of a Kingfisher-like situation, after the airline defaulted on loan repayments in December. Etihad’s offer comes with riders, that Jet’s founder and chairman, Naresh Goyal, who holds a 51 per cent stake, give up the board seat and reduce his stake to 22 per cent, and that the debt is not allowed to be converted into equity.
Goyal, on the other hand, has told SBI that he is ready to invest up to Rs 700 crore and pledge all his shares if he retains at least 25 per cent of the airline.
ALSO READ: Lenders of debt-laden Jet Airways likely to write off up to 25% of loans
On whether the promoters’ stance could delay the resolution, Kumar said, “They have their own differences. If these were not there, we would have resolved it by now. These are all complex problems and they do not get resolved in one day. But we are very close to resolution.”
Kumar also reiterated that since insolvent Essar Steel's case in the National Company Law Tribunal (NCLT) had crossed the 270-day window for long, SBI could not keep its capital locked. Recently, SBI put up its Rs 15,431-crore bad loans in Essar Steel for sale at a discounted reserve price of Rs 9587.64 crore. “We were expecting the resolution and recovery to happen in September and later December, but it has not happened. We don’t know whether it will happen in March or not. The bank cannot afford to keep its capital locked for such a long time,” said Kumar.
ALSO READ: I will strive to transform Jet Airways into a viable business: Nivaan Goyal
On the Insolvency and Bankruptcy Code (IBC), he said it was a good process and lenders were committed to making it a success. “The spirit of the IBC is quick resolution and there is a time period of 270 days. So till we are able to adhere to that time frame, there is no problem," he added.
Commenting on Essar Asia Holding Ltd's offer of over Rs 54,000 crore for bailing out Essar Steel, Kumar said the lenders were not in favour of the same. "It is not just about Essar promoters, but anybody coming after the process is over, the lenders are not in favour of that. When the entire process is over and suddenly you wake up and come to pay... then the sanctity of the process is gone.”
On the Reserve Bank of India (RBI)'s interest rates, Kumar said that given the current scenario, it was unlikely that the rates would be raised. "One thing is certain in this scenario, that interest rates are not going to go up. Whether they will cut or not is very difficult to predict at this stage."
The SBI chairman was at the BSE’s India International Exchange (India INX) for bond issuance worth $1.25 billion for listing on its Global Securities Market (GSM), India’s first and leading capital raising platform for international investors in any currency, at GIFT City's International Financial Services Centre (IFSC). SBI has also listed a $650-million green bond issuance on India INX.
Etihad, which holds a 24 per cent stake in India’s second-largest airline, has made an offer to invest only at Rs 150 per share, which is 53 per cent of Jet’s closing price of Rs 281.35 on Friday. The UAE-based carrier is also seeking an exemption from Sebi on preference pricing and open offer guidelines to invest more for the bailout.
“We are nobody to reject anybody’s resolution plan. We are saying that there is a regulation governed by Sebi. What we have to see is that what Sebi says,” Kumar said on the sidelines of an event at Gujarat International Finance Tec-City (GIFT City) in Gandhinagar. “If no regulatory exemption is required, then it is easier (to resolve). If a regulatory exemption is required, then they have to approach the regulator and we need to know the regulator’s view," he added.
–– ADVERTISEMENT ––
ALSO READ: Naresh Goyal sets terms for Rs 700-cr infusion into debt-laden Jet Airways
Jet owes over Rs 8,000 crore to the SBI-led consortium. The lenders are now wary of a Kingfisher-like situation, after the airline defaulted on loan repayments in December. Etihad’s offer comes with riders, that Jet’s founder and chairman, Naresh Goyal, who holds a 51 per cent stake, give up the board seat and reduce his stake to 22 per cent, and that the debt is not allowed to be converted into equity.
Goyal, on the other hand, has told SBI that he is ready to invest up to Rs 700 crore and pledge all his shares if he retains at least 25 per cent of the airline.
ALSO READ: Lenders of debt-laden Jet Airways likely to write off up to 25% of loans
On whether the promoters’ stance could delay the resolution, Kumar said, “They have their own differences. If these were not there, we would have resolved it by now. These are all complex problems and they do not get resolved in one day. But we are very close to resolution.”
Kumar also reiterated that since insolvent Essar Steel's case in the National Company Law Tribunal (NCLT) had crossed the 270-day window for long, SBI could not keep its capital locked. Recently, SBI put up its Rs 15,431-crore bad loans in Essar Steel for sale at a discounted reserve price of Rs 9587.64 crore. “We were expecting the resolution and recovery to happen in September and later December, but it has not happened. We don’t know whether it will happen in March or not. The bank cannot afford to keep its capital locked for such a long time,” said Kumar.
ALSO READ: I will strive to transform Jet Airways into a viable business: Nivaan Goyal
On the Insolvency and Bankruptcy Code (IBC), he said it was a good process and lenders were committed to making it a success. “The spirit of the IBC is quick resolution and there is a time period of 270 days. So till we are able to adhere to that time frame, there is no problem," he added.
Commenting on Essar Asia Holding Ltd's offer of over Rs 54,000 crore for bailing out Essar Steel, Kumar said the lenders were not in favour of the same. "It is not just about Essar promoters, but anybody coming after the process is over, the lenders are not in favour of that. When the entire process is over and suddenly you wake up and come to pay... then the sanctity of the process is gone.”
On the Reserve Bank of India (RBI)'s interest rates, Kumar said that given the current scenario, it was unlikely that the rates would be raised. "One thing is certain in this scenario, that interest rates are not going to go up. Whether they will cut or not is very difficult to predict at this stage."
The SBI chairman was at the BSE’s India International Exchange (India INX) for bond issuance worth $1.25 billion for listing on its Global Securities Market (GSM), India’s first and leading capital raising platform for international investors in any currency, at GIFT City's International Financial Services Centre (IFSC). SBI has also listed a $650-million green bond issuance on India INX.
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