Jet Airways owes over Rs 8,000 crore to a consortium of 26 banks led by the State Bank of India.

Jet Airways shares locked in 10 percent lower circuit at Rs 61.50 on June 18 after a media report indicated that State Bank of India filed insolvency petition against the company to recover dues.

The stock lost 50 percent of its value in the last seven days. At 10:16 hours IST, there were pending sell orders of 403,240 shares, with no buyers available.

Country’s largest lender State Bank of India approached National Company Law Tribunal in Mumbai against cash-strapped Jet Airways on behalf of the consortium of lenders, reports CNBC-TV18 quoting unnamed sources.

The report said SBI has filed insolvency petition against the airline in Mumbai bench of NCLT and proposed Ashish Chhawchharia of Grant Thornton as Resolution Professional.

After a meeting of the 26 lenders on Monday, SBI said, “after due deliberations, the lenders have decided to seek resolution for Jet Airways under the bankruptcy code since only a conditional bid was received”.

The statement further said the move was necessitated as the prospective investor wants some SEBI exemptions for a possible deal which can be worked out better under the bankruptcy laws.

The decision of the lenders to seek bankruptcy process through the NCLT comes exactly two months after the airline stopped flying on April 17, after being on the fringe since last July.

The Etihad-Hinduja consortium had reportedly shown interest but not given a concrete proposal yet, forcing the lenders to take the NCLT plunge as they have asked for a large haircut from the lenders.

Mumbai bench of NCLT will hear the operational creditors plea on June 20.

Jet Airways owes over Rs 8,000 crore to a consortium of 26 banks led by the State Bank, which now run the airline, while it has a much larger debt pile by way of accumulated losses to the tune of Rs 13,000 crore and vendor dues of over Rs 10,000 crore and salary dues of over Rs 3,000 crore.

The once largest private sector airline started over 25 years ago by airline-ticketing-agent-turned-entrepreneur Naresh Goyal stopped flying on April 17 after it ran out of cash and the unpaid lessors took away most of its 100-odd operational airplanes.

https://www.moneycontrol.com/news/business/markets/jet-airways-hits-lower-circuit-after-landing-in-bankruptcy-court-4109461.html

CFM International will deliver the first engine by 2020

IndiGo has ordered jet engines worth $20 billion from a joint venture of General Electric, US, and France’s Safran SA, the low-cost airline announced on Monday. With this, the biggest buyer of Airbus SE A320neo planes seems to be moving away from Pratt and Whitney engines, which have been experiencing glitches.

The order for 280 engines to power Airbus A320neo and A321neo aircraft will include service and maintenance, the airline’s statement said.

CFM International, the GE-Safran venture, will deliver the first engine by 2020. This was first reported by Business Standard in its May 30 edition.

“We are pleased to partner with CFM for our next batch of Airbus A320neo and A321neo aircraft,” said Riyaz Peermohamed, chief aircraft acquisition and financing officer, IndiGo

He added, “The CFM LEAP engine will allow IndiGo to maintain its strong focus on lowering operating costs and delivering fuel efficiency with high standards of reliability. This new partnership will allow IndiGo to continue to provide affordable fares to its customers.”

The order is a blow to Pratt, a division of United Technologies, which has grappled with delivery delays and groundings in India after spending $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets.

The new deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year. The local affiliate of Singapore Airlines and state-run Air India are already using its turbines.

A move by IndiGo, Asia’s biggest budget carrier by market value, to CFM would be a key reputational negative for Pratt’s geared turbofan and could hurt future sales campaigns. Since induction in 2016, Pratt and Whitney engines have faced multiple issues, primarily because of design flaws that have grounded planes, delayed deliveries, and prompted hundreds of millions of dollars in compensation claims.

Operational problems stretched from long engine start up time delaying turnaround of aircraft, problems with the seal of the engine and durability issues with the turbine blades. The situation turned worse in March 2018 when Indian aviation regulator the Directorate General of Civil Aviation grounded 11 A320 Neo aircraft including eight of IndiGo.

The regulator had heightened scrutiny on the turbines leading to higher removal of engines, which caused a shortage of spare engines and forced planes to be grounded till October last year.

“Pratt’s GTF engine has been fantastic for operators in terms of fuel efficiency, reducing fuel burn by almost 16 per cent. But A320 Neo operators across the world feel that the stabilisation period for this engine has been far longer than initially promised. Since there is an option, airlines will naturally weigh that,” said an industry source.

https://www.business-standard.com/article/companies/indigo-moves-away-from-pratt-whitney-places-20-bn-order-for-cfm-engines-119061701167_1.html

The home financier is looking at various options to raise money.

Private equity firm AION Capital – a joint venture between Apollo Global Management and ICICI Venture – is poised to become the single largest shareholder in troubled mortgage lender Dewan Housing Finance Corp. Ltd (DHFL) in a transaction that involves a possible rights issue after an initial investment by the firm founded by Leon Black. Lone Star is also said to be in the race.

Negotiators are also debating whether the profitable portion of DHFL’s business could be carved out for better value, said people aware of the development. DHFL may have signed a non-binding agreement, they said. The regulator has also been approached, they said.

“DHFL is in advanced talks to sell a stake to AION Capital, a JV between Apollo Global Management and ICICI Venture,” said one of the persons. “The promoter has approached the regulator seeking a nod for the same.” DHFL is looking to sell a large part of the wholesale loan business to Oaktree Capital while the retail business is likely to be sold to private equity firms.

DHFL has been facing a cash crunch since September, when Infrastructure Leasing & Financial Services (IL&FS) defaulted on payment obligations and triggered a liquidity squeeze on nonbanking finance companies (NBFCs).

The home financier is looking at various options to raise money. Apart from selling stakes to private equity funds, it’s also selling loan portfolios. It has already sold assets through securitisation. It recently raised Rs 900 crore by selling loan portfolios to pay investors in commercial papers and short-term debt instruments.

Over the past few weeks, Crisil, Icra and CARE have downgraded DHFL’s debt securities to ‘D’, or default category, citing the delay in interest payments to bond holders.
“The company has engaged with large potential entities to identify and onboard the right strategic partner and is in advanced stages of discussions to achieve the same over the next 90 days,” DHFL chairman and managing director Kapil Wadhawan had said on May 7.
Other PE funds including Lone Star are reported to be in the race to buy stakes in DHFL, which is also looking to offload equity in DHFL Pramerica Life Insurance Co., of which it owns 51 per cent. The company has sold its affordable housing arm Aadhar Housing Finance to Blackstone for about Rs 2,700 crore. It’s also looking to sell its direct selling agents business to raise capital.
Between September 24 last year and May 10, the company has made over Rs 30,000 crore in principal and interest payments to creditors, including fixed deposit holders.

After allegations of wrongdoing in its loan segment surfaced, DHFL has been looking to rope in a strong strategic investor to ease concerns. Wadhawan has agreed to step down from active management once such an investor enters.
DHFL shares slumped on concerns about solvency on Friday, dropping 4.51 per cent to Rs 80.45 on the Bombay Stock Exchange.

https://economictimes.indiatimes.com/markets/stocks/news/pe-firm-aion-capital-set-to-become-single-largest-shareholder-in-dhfl/articleshow/69819075.cms

The buyout firms are looking to invest between $500 million and $750 million in Yes Bank, depending on the final

Private equity investors Blackstone Group, Apax Partners and Warburg Pincus are seeking more details of Yes Bank’s exposure to stressed loan accounts before committing to an equity infusion, potentially delaying the lender’s fundraising plan, two people directly aware of the negotiations said.

The buyout firms are looking to invest between $500 million and $750 million in Yes Bank, depending on the final valuation, the people said on condition of anonymity.

Yes Bank is considering an equity infusion from private equity funds along the lines of the Bain Capital-Axis Bank deal in 2017, which saw Axis Bank raise Rs 11,625.8 crore through a private placement of shares to a clutch of investors led by Bain Capital, Mint reported on May 21.

An equity infusion is expected to help Yes Bank boost investor confidence and improve its ability to absorb future losses at a time when the bank’s CEO, Ravneet Gill, is effecting a cleanup of its balance sheet, resulting in the lender reporting its first quarterly loss of Rs 1,506 crore. The cleanup may have been necessitated because of the bank’s high exposure to struggling non-bank lenders and real estate companies.

“The PE investors have raised concerns about some stressed accounts, which they fear can create a bigger-than-expected hole in the bank’s balance sheet unless resolved suitably,” said the first person cited earlier. “For some of these accounts, the bank has begun provisioning, but a final outcome is still awaited in many of these cases.”

While a spokesperson for Yes Bank did not respond to requests for comment, both people cited earlier said the bank has significant exposure to several stressed companies, some of which have recently defaulted on debt repayments.

While Apax Partners and Blackstone declined to comment, an email sent to Warburg Pincus remained unanswered until press time.

Among stressed loan accounts, the bank has an exposure of over Rs 2,600 crore to various special purpose vehicles of Infrastructure Leasing and Financial Services, which is being investigated for fraud.

Mint reported on November 27 that the Reserve Bank of India began inspecting Yes Bank’s exposure to Dewan Housing Finance Corporation, Indiabulls Group and Sudhir Valia-promoted entities Fortune Financial Services India and Suraksha ARC, among others. At the end of the fourth quarter, Yes Bank’s gross non-performing assets stood at 3.22% against 2.11% in the preceding quarter.

“The prevailing uncertainty could delay the bank’s fundraising plans from PE investors and could potentially rule out any hopes of a premium over the current market price,” said the second person cited earlier.

On 13 June, Yes Bank lost its place on the list of India’s 10 most valued lenders after brokerage firm UBS India cut its target price by over 47%. UBS India cut the target price to Rs 90 a share from Rs 170 earlier.

https://www.moneycontrol.com/news/business/warburg-pincus-blackstone-apax-partners-may-invest-up-to-750m-in-yes-bank-4105081.html

India faced a crunch in the availability of refined copper due to Vedanta’s Tuticorin smelter closure.

Shares of Vedanta fell nearly 3 per cent to Rs 164.80 in Monday’s session after the Chairman’s statement that the firm has lost about $200 million in profits ever since its copper plant in Tamil Nadu was shut.

A PTI report quoted the Group Chairman Anil Agarwal saying that Vedanta lost about $200 million in profits ever since its copper smelter plant in Tamil Nadu was shut more than a year back after police fired on protesters and killed 13 people.

The report also added Vedanta’s statement in its annual report for 2018-19 as, “India faced a crunch in the availability of refined copper due to Vedanta’s Tuticorin smelter closure. Chinese smelter output increased by 4.2 per cent in 2018, despite the closure of some smelters for maintenance during the fourth quarter.”

The Tamil Nadu government had in May last  year ordered permanent shutdown of the copper smelter after bloody protests at the plant in Thoothukudi culminated in the police opening fire on demonstrators.

Vedanta wants the plant to be reopened, pointing to the economic pressures from the closure. As many as 20,000 direct and indirect jobs have been lost due to the shutting of the smelter and about 98,400 more were affected in the consumer or downstream industries.
Shares of Vedanta traded 2.09 per cent down at Rs 166.05 on BSE around 10:15 am.

https://economictimes.indiatimes.com/markets/stocks/news/vedanta-drops-3-as-firm-loses-200-million-in-profits-in-a-year/articleshow/69820430.cms

“The company has sold its entire direct investment of 9.96 per per cent in the fully paid-up share capital of Shriram Transport Finance Company to third party investors on the floor of the stock exchange,” Piramal Enterprises said in a regulatory filing.

Piramal Enterprises on Monday said has divested its entire stake in asset financing firm Shriram Transport Finance Company for approximately Rs 2,305 crore.

“The company has sold its entire direct investment of 9.96 per per cent in the fully paid-up share capital of Shriram Transport Finance Company to third party investors on the floor of the stock exchange,” Piramal Enterprises said in a regulatory filing.

As on March 31, 2019, Piramal Enterprises held 2.26 crore shares amounting to 9.96 per cent stake in Shriram Transport Finance Company.

Based on Monday’s opening share price of Shriram Transport Finance Company of Rs 1,020 per scrip, the stake sale is estimated to have to fetched Piramal Enterprises Rs 2,305 crore.

https://www.moneycontrol.com/news/business/piramal-enterprises-sells-entire-stake-in-shriram-transport-finance-for-approximately-rs-2305-cr-4105331.html