Logistics

Will put Jet back in sky by July 1: AdiGro

Forum Gandhi Mumbai | Updated on May 17, 2019 Published on May 17, 2019

Unsolicited bidder moots at least 25% pay cut for top leadership in return for stock options

AdiGro Group, one of the unsolicited bidders vying for a stake in Jet Airways, has offered to restart the airline’s operations by July 1, with eight to nine thousand employees and 70 aircraft.

Sanjay Viswanathan, Founder and Chairman of AdiGroup, the parent company of AdiGro Aviation, said that he was keen to partner with Etihad to turn around Jet Airways.

Balance-sheet management and not running the airline like a lifestyle company are the two important components of AdiGro’s six-point plan for reviving Jet.

As part of the plan, it wants the employees to take a pay cut; in return, they will be offered ESOPs. “The top leadership will need to take at least about 25 per cent pay cut and others would have to give up 10 per cent.”

“We have asked for a relevant and practical haircut, but more importantly, we are actually giving equity upside. Our binding bid has an equity component for the lender group, which means that not only will they recover their money, but also get a significant upside once our turnaround plan is executed,” he said.

Earlier this week, State Bank of India, which is the lead lender to Jet Airways, started approaching unsolicited bidders including UK-based entrepreneur Jason Unsworth, Mumbai-based Darwin Platform Group and London-based AdiGro Aviation.

According to Viswanathan, “We have put in a binding bid to resurrect the airline. We have been in constant touch with Etihad. SBI and the lender group are quite receptive of the turnaround plan.”

Etihad, which holds a 24 per cent stake in the airline, had made it clear that it wants only a a minority stake.

Currently, Jet Airways’ debt totals around ₹14,000 crore, and according to sources, the company will need ₹8,000 crore.

“We need approximately ₹5,000-6,000 crore (to resurrect the airline). It’s [the assumption] based on our discussions with Etihad and SBICaps so far,” Viswanathan said.

AdiGro Group is based out of London, and according to FDI norms, a foreign investor group cannot have more than 49 per cent stake in an Indian company. AdiGro has offered to pick 24.9 per cent stake with Etihad holding about 24.1 per cent. AdiGro has offered ₹2,500 crore.

According to Viswanathan, SBI Caps is putting together a book, which will list all the assets and liabilities of the company along with how much capital is required. Viswanathan is bullish that AdiGro will emerge as a partner of Etihad. “We will resurrect the airline by July 1,” he added.

’Etihad, the ideal partner’

He is also firm about his choice of Etihad as the partner for several reasons. “They [Etihad] have been in the airline for several years now, so they know what the opportunities and the concerns are. Second, the Middle East is a very good hub to scale up. Third, they’re a good partner to work with. We need someone from Etihad to be running Jet, and hence, we have made it very clear that we want Cramer Ball, who was with the airline earlier and who was the most successful of all the CEOs.”

AdiGro has laid down other conditions as well. “We have made it clear that our investors want me to be a non-excecutive chairman of the airline. But we will bring operating experts from India who know the country’s aviation market.”

 

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Published on May 17, 2019
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