Investors who boarded Jet Airways after the National Company Law Appellate Tribunal (NCLAT) approved the resolution filed by the Jalan Fritsch Consortium on March 7 are in for a rude shock.
They will see 99 percent of their money getting wiped out when the resolution plan come into effect. According to the resolution plan, the exiting public shareholders will get only one share in the reconstituted company for every 100 held in Jet Airways.
Jet Airways has gained 11 percent over the past five trading sessions on the news of the resolution plan being approved.
Based on its current price, the stock commands a market-cap of Rs 539 crore.
At 10.38 am, Jet Airways was locked in a 5 percent upper circuit at Rs 47.45 on the National Stock Exchange, with 40,000 shares traded on NSE and BSE together.
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Here is how the restructuring of equity will be effected:
First, the equity shares held by the promoters, Etihad and financial institution equivalent to 8,51,98,037 shares of Rs 10 each, collectively representing 75 percent shareholding as well as all the preference shares held by then shall be fully extinguished, meaning cancelled.
Then, the face value of remaining shares (2,83,99,346 equity shares) constituting 25 percent of equity that belong to the existing public shareholders shall stand reduced from Rs 10 to Re 1 each.
These shares will then be converted into shares with face value of Rs 10 each when it is consolidated into the new entity. Any fractional entitlements of equity shares resulting from such consolidation shall be rounded off to the nearest whole integer.
In the restructured company, the Jalan Fritsch Consortium will infuse fresh capital of Rs 600 crore at a price of Rs 50 a share, including a premium of Rs 40. Besides, debt held by creditors and dues of workers and employees into shares will be effected at the same price (Rs 50).
So finally, public shareholders who now hold 2,83,99,346 shares will end up with 2,83,993 shares in the new company.
The equity from new promoters will be locked in for one year from the date of issuance of shares.
Jet 2.0 will have to ensure that the public shareholding in the new company will be restored to 10 percent within 18 months and 25 percent within three years through a fresh issuance at market price.
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