Jet Airways has got a second lease of life after its lenders finally zeroed in on an offer made by the Kalrock Capital-Murari Lal Jalan consortium on Saturday. The resolution plan submitted by the consortium secured over 99 percent of the votes from the committee of creditors, two people familiar with the matter told
CNBC-TV18 after the voting concluded. Now, the final nod from NCLT is required before the new owners can take over the airline.
While this comes as a huge relief for the airline, its employees, and other stakeholders, Jet Airways’ lenders will have to write off a large part of their exposure as per the offer made by the Kalrock consortium.
Kalrock Consortium’s Offer
Banking executives confirmed to
CNBC-TV18 that the offer entails a total payout of Rs 866 crore to all creditors. Of this, the Kalrock-Jalan consortium has offered Rs 380 crore to financial creditors, and another Rs 391 crores in the form of non-convertible debentures (NCDs). It has also offered equity to the lenders in both Jet Airways and Jet Privilege Private Limited (JPPL). Read here: Meet the potential new owners of Jet Airways: Kalrock Capital & Murari Lal Jalan Jet Airways Debt
Various classes of creditors have collectively made claims of Rs 40,259.12 crores against Jet Airways in NCLT. Financial creditors have made claims of Rs 11,344.72 crore, operational creditors Rs 26,237.35 crore, workmen and employees Rs 569.02 crore, Authorised Representative of Workmen and Employees Rs 913.14 crore, Other Creditors Rs 1,117.02 crore and Operational Creditors Claim filed by Dutch Administrator Rs 77.85 crore.
Of these, the resolution professional has admitted total claims amounting to Rs 22,167.23 crores as of September, including Rs 7,459.81 crores from financial creditors, including domestic and foreign banks, other financial institutions, corporate guarantors and lessors.
Among domestic banks, State Bank of India has the largest exposure by far, with admitted claims of Rs 1,636.22 crore, followed by Yes Bank with Rs 1,084.44 crore, Punjab National Bank Rs 754.11 crore, IDBI Bank Rs 594.42 crore, Canara Bank Rs 543.61 crore, ICICI Bank Rs 519.08 crore, Bank of India Rs 263.57 crore, Indian Overseas Bank Rs 158.24 crore, Syndicate Bank Rs 169.73 crore, PNB Hong Kong Rs 42.98 crore, ICICI Bank ECB Loan Rs 9.86 crore, and Axis Bank Rs 0.41 crore.
Steep Haircut for Lenders
With the offer of Rs 380 crore payout to financial creditors, plus NCDs guaranteeing a net present value of Rs 391 crore, Jet Airways’ financial credits are facing a haircut of almost 90 percent. The lenders are also hopeful for some upside from the equity stake they get in Jet Airways and Jet Privilege, but just how much- remains to be seen.
“It was this plan or liquidation. We didn’t have a choice. The plan offered a slightly better recovery, so that’s what banks voted for,” said the head of a large banker to Jet Airways.“The realized liquidation value of the airline, with only some aircraft to speak of as assets, would be far lower in value compared to the small token amount we will recover under the plan offered (by Kalrock consortium). The idea is to revive companies under IBC, and not to go for liquidation. Even we don’t know if this consortium will be able to get Jet flying again, but we had to give it a chance,” summed up another banker with large exposure to the airline.