January 19 2020
Jet Airways may raise ₹6,000 cr. from aircraft sale, investors
16 February 2019

Banks may not extend more than ₹1,000 cr. to address ₹8,500 cr. funding gap

Debt-laden Jet Airways, which approved a provisional resolution plan on Thursday, will need to raise ₹3,000 crore by selling (and then leasing back) some of its aircraft, and a new investor would have chip in with another ₹3,000 crore, sources with direct knowledge of the plan told The Hindu.

The Jet Airways board, which had approved the bank-led provisioning resolution plan, had estimated the funds requirement to be ₹8,500 crore.

Debt-equity conversion

Banks are set to take controlling stake in the airline by owning 11.4 crore shares, or over 50% stake, for ₹1 by converting a part of their debt into equity.

“Banks will not extend more than ₹1,000 crore, as part of the resolution plan,” said a source.

Jet has a fleet of 123 aircraft, including 16 that it owns — 10 Boeing 777, three Airbus A 330 and three Boeing 737. The rest are on lease. Of the 16 aircraft, six would be sold and leased back, as per the proposal.

Once the provisional debt recast plan is implemented, banks would own over 50% stake in the carrier while its promoter Naresh Goyal’s stake would fall to 25% from 51% now. Similarly, foreign partner Etihad’s stake would fall to about 12%. After the new investor comes in, Mr. Goyal stake’s would further fall to about 12%. The public and institutional investors hold 25% stake in the airline.

An e-mail sent to the company seeking its response remained unanswered till the time of going to the press.

Banks, which have an exposure of ₹8,200 crore, have to make a 15% provision once the account is restructured as per Reserve Bank of India norms.

Negative net worth

As on December 31, Jet had a negative net worth of ₹10,370 crore. Its current liability exceeds current assets by ₹9,610 crore.

Jet Airways Group reported a net loss of ₹732 crore for the third quarter against a net profit of ₹186 crore in the year-earlier period.

The resolution plan would be presented to the consortium of lenders, overseeing the committee of the Indian Bankers’ Association, board of directors of Etihad Airways and promoter Naresh Goyal, for consideration.

The plan is subject to the company receiving requisite approvals from shareholders at its EGM to be held on February 21, 2019.



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