In a clear indication that lenders are set to get a larger say in the running of debt-laden Jet Airways, the airline on Monday said it would seek shareholders’ approval to convert existing debt into equity.
It has also proposed to increase the authorised share capital of the company from ₹200 crore to ₹2,200 crore, a move aimed at issuing fresh shares to the lenders.
EGM on Feb 21
The airline has called for an extraordinary general meeting on February 21, said a BSE filing.
Under the proposal, the lenders will also get to appoint one or more persons as nominee directors or observers on the board of the company. Jet is also seeking approval to raise further loans within the overall existing borrowing limit of ₹25,000 crore, and provide the lenders with the right to convert such loans into shares of the company.
The airline has loans of over ₹8,400 crore, with SBI being its biggest lender. SBI’s exposure is said to be close to ₹2,000 crore.
The airline owes money to its pilots, lessors, banks and vendors. Its problems have been exacerbated by higher oil prices and intense pricing competition in the domestic market. Jet Airways had also delayed the payment of an interest and principal instalment due on December 31 to its lenders. In a bid to solve things between lessors, lenders and Jet Airways, SBI had in a meeting asked the airline to propose a restructuring plan.
In a letter sent to SBI on January 16, Naresh Goyal, the promoter of the full-service carrier, had made an offer to infuse ₹700 crore in Jet if he was allowed to retain an at least 25 per cent stake. He had also said he should be allowed to remain the promoter of the airline.
Currently, Goyal owns 51 per cent of the shares while Abu Dhabi-based Etihad Airways holds 24 per cent. Media reports suggested that Etihad was willing to increase its stake to 49 per cent but wanted to see the exit of Goyal and his family from the management of Jet Airways. Etihad has also offered ₹140-150 a share, far lower than the current market price. On Monday, Jet shares dipped 3.06 per cent to close at ₹245.40.
via Jet Airways to seek shareholders’ nod to convert debt into equity – The Hindu BusinessLine