India’s Jet Airways holds crisis meeting after lenders reject fund injection

Debt-laden Jet Airways’ operations is down to seven planes flying domestic routes. Above, a grounded pilot awaits news of the lenders’ meeting on Monday, April 14, 2019. (AFP)
Updated 16 April 2019
0

India’s Jet Airways holds crisis meeting after lenders reject fund injection

  • Thousands of passengers have been stranded in recent weeks after the airline canceled international flights because it cannot pay its bills
  • Lenders met for several hours on Monday but failed to agree on how to proceed

MUMBAI: The board of stricken Indian airline Jet Airways could suspend all operations Tuesday after lenders refused to release emergency funds to keep the debt-laden carrier flying, media reports said.
An emergency board meeting was called for Tuesday after the latest blow to the beleaguered company.
Thousands of passengers have been stranded in recent weeks after the airline, which has debts of more than $1 billion, canceled international flights because it cannot pay its bills.
Chief Executive Vinay Dube called the board meeting after lenders led by the State Bank of India failed on Monday to agree to give needed emergency cash.
“The management will seek guidance from the board on the next steps forward,” Dube said in an email to staff late Monday as he announced that the cancelation of international flights was being extended to Thursday.
Indian dailies said suspending all operations was one option open to the board though this could mean Jet would lose its operating license.
Business Standard quoted sources saying the airline had only enough fuel to keep its seven remaining jets running until Tuesday afternoon.
An official from the National Aviation Guild, the union for Jet pilots, said: “The airline is flying seven planes right now. The minimum number to keep its scheduled operations license.”
Jet has been in a tailspin for months. Its fleet has been cut from about 120 in December. It has defaulted on loans and most staff have not been paid for many months.
A consortium of lenders took control of Jet last month, pledging to give $218 million of “immediate funding support” as part of a debt resolution plan.
The lenders met for several hours on Monday but failed to agree on how to proceed.
Later the State Bank of India released a statement saying that the banks were trying to help Jet.
“Cooperation by and support from all the other stakeholders will be the key to the success of the process,” it added.
The SBI-led consortium is trying to find a buyer for Jet, which was until recently India’s second-biggest airline by market share.
A deadline passed Friday for prospective bidders to express an interest in acquiring a 75 percent stake in the carrier.
Etihad Airways, which owns a 24 percent stake, has reportedly submitted an expression of interest to buy a controlling stake.
The SBI was expected to announce a shortlist of prospective bidders later on Tuesday. They would then have until April 30 to submit formal bids.
A collapse of Jet would deal a blow to Prime Minister Narendra Modi’s pro-business reputation as he seeks a second term in ongoing national elections.


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 23 April 2019
0

Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.