Creditors, mainly Indian public sector banks, took over Jet in early 2019 but failed to keep it operating as its cash crunch grew.
A consortium comprising a UAE-based entrepreneur and Kalrock Capital was given the final go-ahead to rescue the grounded airline Jet Airways by a “committee of creditors” for the debt-laden airline.
The creditors’ panel on Saturday voted in favour of a plan submitted by the consortium to revive and operate the debt-laden airline more than a year after it was grounded.
The consortium, in which UAE entrepreneur Murari Lal Jalan teamed up with the leading UK investment firm, has reportedly offered a payout of Rs8.5 billion to lenders of India’s biggest private airline which went bankrupt with $1.2 billion in debt. The offer also includes equity in the airline to the lender banks led by State Bank of India.
Jet Airways, founded by Naresh Goyal, had piled up debts of about Rs80 billion, and faces claims of nearly Rs360 billion, including salary arrears of employees. Jet has 3,300 employees currently on its payroll as opposed to 22,000 employees, including 6,000 on contract at its peak. Jet’s stock has been trading at the upper circuit over the past few days on hopes that a final resolution is near. Shares rose from Rs31.55 to Rs40.15.
Jalan, a billionaire entrepreneur, has investments across the UAE, India, Russia and Uzbekistan in sectors including real estate, mining, trading, construction, fast-moving consumer goods, dairy, travel and tourism, and industrial works.
He is the founder and chairman of MJ Developers, which is currently engaged in developing residential and commercial properties in Uzbekistan.
Kalrock Capital, operating in financial the advisory and alternative asset management sectors, is backed by Fritsch, an investment group founded by serial entrepreneur Florian Fritsch.
Ashish Chhawchharia, the resolution professional appointed by the lenders of Jet Airways, said in a stock exchange notification that the e-voting concluded on October 17, 2020 and “the resolution plan submitted by Murari Lal Jalan, and Florian Fritsch have been duly approved by the Committee of Creditors under Section 30(4) of the Code as the successful resolution plan”.
According to informed sources, over 97 per cent of Jet Airways’ committee of creditors voted in favour of the resolution plan submitted by the winning consortium.
In July this year, two of the four shortlisted bidders’ consortia submitted a bid to get a stake in the debt-strapped Jet Airways. This was the fourth and final attempt to resurrect the airline which was grounded in April 2019 over unpaid dues and multiple defaults.
Reportedly, both bidders, in their resolution plan, had proposed to the lenders that they were willing to liquidate the assets and reinvest the money in the revival of the airline.
Manoj Madnani, board member of Kalrock Capital, was quoted by CNBC-TV18 saying the consortium’s plan is to run Jet Airways as a full-service airline. “So we will start with domestic, we already have a route plan in mind for domestic, and will go international as well depending on the slot allocation,” he said.
