Jet Airways (India) Ltd. on Friday said that stakeholders of the airline and board of directors of the company are yet to agree and approve the resolution plan that is expected to infuse much needed capital in the company.
“The said resolution plan which, inter alia, contemplates various options on the debt equity mix and proportion of equity infusion by the various stakeholders will be implemented once agreed to and approved by all the stakeholders, including the Board of Directors of the Company and subject to receipt of applicable statutory, regulatory, contractual and corporate approvals and other requisite consents,” the cash-strapped airline said in a BSE statement.
In an extraordinary general meeting (EGM) on 21 February, shareholders of Jet Airways will vote on a proposal to raise its authorized share capital from ₹200 crore to ₹2,200 crore through a special resolution. The proposal from Jet Airways also contains a plan to give lenders the right to nominate one or more members on the airline’s board, post conversion of debt into equity.
The move will allow the debt-laden airline to issue fresh shares to lenders in a much-needed financial lifeline. It is, however, expected to result in a hefty drop in the holdings of the airline’s founder Naresh Goyal and Abu Dhabi-based Etihad, with stakes of 51% and 24%, respectively, in Jet Airways at present.
“…State Bank of India (SBI), in consultation with other members of the consortium of lenders and other stakeholders, has been working on a comprehensive resolution plan towards a turnaround of the Company for its sustained growth and restoration of financial health,” the airline said in the statement.
Etihad Airway’s chief executive Tony Douglas had earlier informed the SBI-led consortium of domestic lenders to Jet Airways that it will not exceed its offer of ₹150 per share of Jet Airways for making any fresh investment, according to reports. The airline has also demanded a complete exit of Goyal and his family from any management or even an advisory role in Jet Airways.
Following this, Goyal made a financial offer to SBI to retain control of the ailing airline, even as its single-largest public shareholder. Goyal has told SBI that he was ready to invest up to ₹700 crore and pledge all his shares, provided he retained at least a 25% stake.
Goyal is expected to bring in fresh investments by subscribing to the new shares of Jet Airways. Abu Dhabi-based Etihad will also be able to make fresh investments without triggering a mandatory open offer.
Shares of Jet Airways rose 7.79% to ₹255.90 on BSE, while the benchmark Sensex rose 0.59% to 36,469.43.
Source: Mint