There were quite a few media articles saying SBI was about to move the NCLT route to recover loans from jet . The airline's stocks fell 5% due to the same .
Today SBI confirmed that it was just a media speculation ! Yet another (failed) attempt by Indian media and lobbyists to damage the situation .
I will say it again, I just don't get how the banks, the GOI or Jet thinks this is the best way to handle situations like this. There is no doubt in my mind that eh GOI does not want Jet to fail (and I think they are right by this). So given that, why not negotiate the settlement (since the GOI controls the banks) and roll out the solution asap. What is still going on behind the scenes that causes this to drag on and on. It is nothing short of a joke. To me this speaks volumes about the Indian business environment. So sloppy. On one hand you have the more of less efficient western capitalist economies like UK/US and then the ultra managed Chinese economy. I can't believe I am saying this, but I am starting to think that the Chinese system is probably more suited for India.
One can see conspiracy theory in everything if they have little bit of imagination. The situation Jet finds itself is bad, I wonder how people still think its all media hype. Jet pilots have threatened to strike if not paid dues by end of this month.
This is a complex deal and not something that can be done in a hurry. Banks have been exposed to thousands of crores. They can't just throw good money after bad. The biggest fear is whether Jet will end up like Kingfisher and end up with 8000 crores loss! The promoters are not willing to put in more money. There are reports that SBI and PNB are willing to put in Rs 500 crores as emergency funding but want it to have higher priority, which means other lenders need to agree to it. Goyal isn't willing to walk away from Jet without extracting his pound of flesh. EY isn't willing to invest more, or has bunch of conditions its insisting on. Everyone wants to look after their interests, which are conflicting with others'.
Even if banks take 51% share in 9W, they don't know how to run airline business. And once its majority PSB owned, there are lots of restrictions and oversight on running the company. And if the company still goes under, guess who the CAG and others will blame! The best that the banks are hoping for is that they get 51% stake and immediately sell at least 20-30% to EY. And is EY willing to buy that, and at which price & conditions?
That this is election year complicates matters. If banks take a huge haircut now, it will become a major issue. Same if 9W goes under. The situation has to be somehow managed to keep 9W afloat till end of May, when it will be 180 days since 1st default and it can be referred to NCLT. And elections will be over by then, so no major damage to ruling party.
In fact, taking 9W to NCLT might be best option looking at how things are turning out. Goyal will be out, Tatas or someone else might pick it up at a low price, banks will take around 50-60% haircut which is better than losing everything, and people will keep their jobs. Of course, the worst case is also possible that no one bids for 9W and company folds, banks lose 100% and people their jobs! But given that 9W still has some good reputation and holds slots in BOM, LHR etc and has a running operation, there is a good chance that there will be some bidder. SBI, PNB ready to infuse Rs 500 crore in emergency funding for Jet Airways, says report
SBI, PNB ready to pump in emergency funding for Jet AirwaysEtihad conditions may delay debt-laden Jet Airways resolution plan
State-owned banks State Bank of India (SBI) and Punjab National bank (PNB) have agreed to infuse Rs 500 crore in emergency funding to Jet Airways, allowing the debt-laden airline to continue operations until the airline's lenders resolve debt restructuring, reported The Economic Times, citing sources close to the development.
The fresh debt is proposed to be ranked at higher seniority, which means it will be given first preference in the event of loan recovery, noted the report, citing a source.
Etihad is waiting for clarity on the funding that State Bank of India (SBI) and National Investment and Infrastructure Fund (NIIF) will provide Jet Airways in terms of equity.
The Gulf carrier has been pitching for SBI and the NIIF to own 51 per cent and invest Rs 2,200 crore in the airline, said sources.
Etihad has sought the right of first refusal (RoFR) after one year and wants SBI to get a confirmation from the Securities and Exchange Board of India (Sebi) that the right, if exercised, will not trigger a mandatory open offer, said sources in the know.