Jindal Power will not bid to take over airline Go First: Sources

Jindal Power will not bid to take over airline Go First: Sources

The fate of Go First, the Indian airline facing insolvency, seems to be taking a challenging turn as Jindal Power Ltd, the sole company whose expression of interest was accepted by creditors, has reportedly decided not to proceed with a bid. This development, as reported by three sources familiar with the matter, brings the airline closer to the possibility of liquidation.

The deadline for the submission of takeover bids is looming, set to conclude on Tuesday. According to the sources speaking to Reuters, Jindal Power Ltd opted against submitting a bid after a thorough evaluation of Go First’s financial statements. This decision adds another layer of uncertainty to the future of the airline, already navigating the complexities of insolvency.

Exclusive: India’s Jindal Power will not bid to take over airline Go ...

While there is a potential for the deadline to be extended through a court application, the sources suggest that creditors, at present, are not inclined to pursue such an extension. This indicates a sense of urgency and a reluctance to prolong the resolution process further.

The situation underscores the challenges faced by Go First and the aviation sector in India, which has been significantly impacted by the economic downturn and the disruptions caused by the COVID-19 pandemic. The decision by Jindal Power Ltd not to proceed with a bid adds a new dimension to the unfolding narrative of Go First’s financial struggles and the attempts to secure a viable path forward.

As the airline inches closer to the possibility of liquidation, stakeholders, including creditors, employees, and the aviation industry at large, will be closely watching for further developments and potential interventions that could shape the future course of Go First. The evolving situation highlights the complexities and uncertainties inherent in the aviation business, especially in challenging economic conditions.

Wadia Group stays away from Go First insolvency process

The decision by Jindal Power Ltd not to proceed with a bid for Go First, despite its expression of interest being accepted by creditors, appears to be driven by a strategic assessment. According to one of the sources close to the matter, the expression of interest (EoI) was primarily intended to assess the valuation of the airline and gain access to the company’s data.

“The EoI was largely to check the valuation of the airline and get access to the company’s data,” stated one of the sources. This suggests that the company undertook a comprehensive evaluation of Go First’s financial health and other critical factors, using the EoI process as a means to gather crucial information for strategic decision-making.

See also  Team studies drone strikes on airplanes by firing them into a wall at 500 MPH

Following this evaluation, Jindal Power Ltd has reportedly opted not to submit a bid, signaling a conclusion to its interest in taking over the airline. The sources providing this information chose to remain anonymous, highlighting that they were not authorized to speak to the media. This confidentiality underscores the sensitivity of the situation and the complex dynamics involved in the insolvency proceedings of Go First.

India's Jindal Power will not bid to take over airline Go First ...

While Jindal Power Ltd’s decision adds a layer of uncertainty to the future of Go First, the broader implications extend to the aviation industry in India, which has been grappling with challenges exacerbated by economic downturns and the disruptions caused by the COVID-19 pandemic. The insights gained through the EoI process, even if not culminating in a bid, may inform the company’s broader strategic considerations and influence its approach to potential future opportunities in the aviation sector or other industries.

The silence from both Jindal Power and Go First’s resolution professional adds to the intrigue surrounding the situation, as they did not respond to emails seeking comments on the recent developments. The lack of official communication leaves stakeholders and industry observers in a state of anticipation, waiting for insights into the rationale behind Jindal Power’s decision and the potential implications for Go First’s future.

Go First initiated voluntary insolvency proceedings in May, marking a pivotal moment in its financial challenges. The airline currently faces a substantial debt burden, owing a total of 65.21 billion rupees ($785.6 million) to its creditors. The insolvency process was seen as a mechanism to navigate the financial complexities and seek a resolution that aligns with the interests of creditors, employees, and other stakeholders.

See also  Domestic passenger traffic slips to 10-year low in pandemic-hit FY21

Bankers, having exposure to Go First, had reportedly pinned their hopes on Jindal Power’s interest in the airline. The sudden turn of events, with Jindal Power opting not to submit a bid, raises questions about the next steps for Go First and the potential outcomes of the insolvency proceedings.

The lack of official statements and responses from involved parties creates an atmosphere of uncertainty, leaving various stakeholders in the dark about the strategic considerations and future plans for the airline. As the insolvency process unfolds, the industry will be closely monitoring for any official announcements or interventions that may shed light on the direction Go First is headed and the broader implications for the aviation sector in India.

The banker’s statement, “But it looks like that hasn’t materialized,” provides a glimpse into the disappointment and uncertainty surrounding Jindal Power’s decision not to submit a bid for Go First. The banker, speaking anonymously due to lack of authorization to speak to the media, reflects the sentiment of those who had anticipated Jindal Power’s interest as a potential lifeline for the airline’s resolution.

Among the top creditors to Go First are the Central Bank of India, Bank of Baroda, IDBI Bank, and Deutsche Bank. These financial institutions play a crucial role in the insolvency proceedings and are likely to be closely involved in the decision-making process as the airline’s future is deliberated.

The upcoming meeting of the Committee of Creditors on Wednesday holds significance as it will serve as a platform to determine the future course of action for Go First. The decision-making process within this committee is pivotal in shaping the outcomes of the insolvency proceedings, and stakeholders, including creditors and industry observers, will be closely watching for any announcements or decisions that emerge from this meeting.

See also  If Social Distancing Is Followed In Airplanes, Prices of Tickets Can Go Up To 4 Times

Both bankers, providing insights into the situation, chose to remain anonymous, underscoring the sensitivity and confidentiality surrounding the ongoing developments. As Go First navigates through these crucial stages of insolvency, the decisions made by creditors and other stakeholders in the coming days will play a crucial role in determining the airline’s fate and its impact on the broader aviation landscape in India.

The outlook for Go First appears increasingly challenging, with both bankers suggesting that the liquidation of the airline is now the most likely option due to the absence of serious bidders. The lack of substantial interest from potential acquirers has evidently shifted the trajectory of the insolvency proceedings, raising concerns about the airline’s ability to secure a viable resolution.

In anticipation of potential liquidation, banks are reported to be evaluating collateral held as security with lenders. This step underscores the practical considerations involved in the insolvency process, where creditors may explore avenues to recover their dues in the absence of a successful resolution plan.

Go First’s legal battles add further complexity to its situation, particularly with its lessors. The ongoing dispute involves lessors seeking to repossess planes, a move initially blocked by a moratorium imposed by Indian courts. Despite a recent amendment to India’s insolvency rules allowing lessors to reclaim leased assets, the application of this change to Go First is still pending a court decision.

The uncertain legal landscape adds to the challenges faced by the airline, making the resolution process more intricate and unpredictable. As stakeholders, including creditors and lessors, navigate the complexities of insolvency proceedings, the industry will closely watch for any developments that provide clarity on Go First’s future and the implications for the aviation sector in India.


Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please consider supporting us by disabling your ad blocker