No clarity

Though there was no clarity from where the bidders would rustle up the 8.52 crore shares that are going to go under the hammer, the speculation is that existing shareholders like Etihad and Naresh Goyal may sell either a part or their entire stake.

It is also understood that a portion of the promoters’ stake that has been pledged with the lenders could also be sold. For the period ended December 31, 2018, Etihad held a little over 2.72 crore shares.

According to the document, the bid process will comprise of two stages: the EOI stage which will see the submission and evaluation of the EOIs and selection of the qualified bidders. This will be followed by the bid stage which will include submission and evaluation of the bids and selection of the successful bidder.

The bid document added that the consortium must have a designated lead member who should have the authority to represent and take decisions on behalf of all the members.

The lenders of Jet Airways on Monday invited bids from overseas and Indian investors for up to 75 per cent of the beleaguered carrier, sparking some confusion about whether founder Naresh Goyal and estranged partner Abu Dhabi-based Etihad Airways’ holdings were also being put on the block.

The bids have been sought from both strategic and financial investors. Resident and non-resident Indians, foreign individuals and persons of Indian origin living abroad can also bid.

The expression of interest (EOI) bids will have to be submitted by April 10 along with a stack of documents that must include a solvency certificate to qualify for the right to stump up a bid.

The binding financial bids will have to be submitted by April 30.

In a public notice, the SBI invited expressions of interest (EoI) “for the change in control and management” of Jet Airways. More importantly, the EoI document showed that the potential bidder will have to acquire at least 3.54 crore shares, or 31.2 per cent of the equity of the company, and a maximum of 8.52 crore shares or 75 per cent equity.

Tough financial criteria have been set for the qualifying bidders but the lenders have cut some slack for public sector units, government agencies and sovereign wealth funds which have been given the right to go straight into the bidding round.

Who can bid?

Any individual, trusts, co-operative societies, private and public companies, sole proprietary firms or partnership firms can bid. So can companies registered outside India.

The likely bidders include Tata Vistara, Delta Air, Etihad and investment firms like TPG and NIIF.

The lenders were slated to release the EoI document last Saturday. However, the process was delayed because legal clarifications were sought in the wake of the Supreme Court judgment that had quashed a circular issued by the RBI on February 12 last year.

The RBI circular had directed banks to trigger a 180-day resolution process against a corporate entity if it defaulted on a loan by even one day. If the resolution plan did not emerge after six months, the entity was supposed to go before the bankruptcy court facing the scary prospect of possible liquidation.

Under the plan worked out in February this year, the lenders had agreed to convert just one rupee of Jet’s debt of Rs 8,000 crore into 11.4 crore shares — at a time when the stock closed at Rs 264.10 a share on the BSE on Monday.

The seemingly bizarre debt to equity conversion plan was possible because of the RBI circular of February 12 that attributed no value to the shares of a company whose net worth had turned negative.

The apex court’s verdict on the RBI circular rendered the Jet debt-to-equity conversion plan infructuous.

The Telegraph