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Last Updated : Apr 01, 2019 03:08 PM IST | Source:

Jet Airways’ flight to recovery: Lenders devise a new debt resolution plan

Two investors will make an equity infusion of Rs 3,800 crore. Banks will chip in Rs 850 crore more while Rs 485 crore will be on behalf of public shareholders

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Lenders to debt-burdened Jet Airways have come up with a new debt resolution plan that includes fresh fund infusion of Rs 9,535 crore, a rights issue share sale and complete exit of founder Naresh Goyal and Etihad Airways.

According to media reports, there will be an equity infusion of Rs 3,800 crore by two investors that may include the National Investment and Infrastructure Fund (NIIF). Banks will chip in Rs 850 crore more while Rs 485 crore will be on behalf of public shareholders. An additional debt of Rs 2,400 crore and non-fund based facilities of Rs 2,000 crore are also part of the plan.

While the new plan ensures exit of Goyal and Etihad, it also implies huge haircuts for banks that are working overtime to save the airline. Goyal and Etihad hold 51 percent and 24 percent stake in the company, while a consortium of lenders led by the State Bank of India (SBI), which have outstanding exposure of Rs 8,200 crore, will have to write-off debt worth Rs 2,600 crore.

To ensure a smooth transition of ownership, an independent trust will be created to transfer the shareholding of Goyal and Etihad. The trustees, to be appointed by lenders, will have a call option on the shares owned by the trust at Rs 150 apiece.

The interim management committee will likely be chaired by former SBI chief AK Purwar. SBI Capital Markets will be given the mandate to carry out the rights issue and advise on-boarding of the new investor.

Jet Airways' board had approved a resolution plan put forth by lenders last week. As per the plan, lenders decided to take control of the airline and infuse Rs 1,500 crore.

The airline has been defaulting on salary payments to pilots, engineers and senior management since August 2018. Its pilots and engineers has threatened to stop work from April 1 if their dues were not cleared by March 31. The strike has been deferred till April 15.

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First Published on Apr 1, 2019 12:45 pm
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