Bankers to Jet Airways are understood to have asked promoter Naresh Goyal to pledge his entire stake of 51% in the carrier to them as they consider throwing him a lifeline in the form of interim funding. Bankers familiar with the development told FE that according to the plan under consideration, the consortium would provide additional loans in proportion to their existing exposure to the airline.
Meanwhile, State Bank of India (SBI) chairman Rajnish Kumar confirmed on Wednesday that lenders were looking for solutions to keep the airline afloat. Kumar met with finance ministry officials in New Delhi to update them on developments related to airline.
“All is not lost and everyone believes that Jet Airways should keep flying. Jet is a good airline property,” the SBI chairman told mediapersons after the meeting. Kumar indicated that the current situation did not warrant dragging the airline to bankruptcy court.
Meanwhile, the consortium is also exploring investments by private equity firms and alternate investment funds. The Abu Dhabi-based Etihad Airways which owns a 24% stake in Jet has all but decided to walk away from its investment. No firm proposals have been received so far.
Lenders to Jet Airways had met on Tuesday to discuss various options to keep Jet afloat, though the meeting had reportedly proved inconclusive.
On Wednesday, FE reported Etihad may exit from Jet provided its stake is valued at the current market price.
Jet Airways had in 2015 given Punjab National Bank a non-disposal undertaking. This was essentially a promise that Naresh Goyal would not dilute his shareholding in the company, by way of any outside arrangement or sale, to below 51% at any time and would continue to be the majority shareholder in the airline.
Jet Airways has been witnessing a severe financial crunch and has been unable to service loan payment obligations to lessors, creditors and pilots in months. According to the latest update, the airline’s operational fleet is down to 35 aircraft while its pilots have threatened to cease work starting April 1 unless their salaries are paid.
As per the post-earnings conference call for its Q3 results, as of December 2018, the airline’s gross debt stood at `7,654 crore, net debt at `7,299 crore.
According to various reports, Jet chairman Naresh Goyal has also met with Qatar Airways management and other potential investors.
With SBI as the lead lender, a resolution plan was being worked out within the norms set by the Reserve Bank of India’s resolution framework and under the Sashakt programme. The Bank-Led Resolution Plan was to include sanction of interim credit facilities by domestic lenders on terms to be agreed upon and a governance structure including the board composition in accordance with applicable statutory and regulatory requirements.
An earlier arrangement for interim financing to the Indian carrier included `750-crore infusion by the lenders against an equivalent infusion by Etihad, which it was to provide itself or procure from an offshore or onshore lender, and was subject to approvals from Etihad Airways board of directors, which never materialised.
Source: Financial Express