Jet Airways debt recast: Lenders to have largest shareholding

The plan proposes restructuring, under the provisions of the Reserve Bank of India's February 12, 2018 circular, to meet a funding gap of nearly Rs 8,500 crore.

Jet Airways debt recast: Lenders to have largest shareholding

Mumbai: Debt-laden Jet Airways board Thursday approved a bank-led provisional resolution plan (BLPRP) which will pave the way for conversion of the airline's debt into equity, making lenders the largest shareholders in the company.

The plan proposes restructuring, under the provisions of the Reserve Bank of India's February 12, 2018 circular, to meet a funding gap of nearly Rs 8,500 crore.

"The BLPRP contemplates conversion of lenders' debt into 11.40 crore shares of Rs 10 each by allotment of such number of equity shares to the lenders that would result in the lenders becoming the largest shareholders in the company," the airline said in a filing to exchanges.

It said the allotment of 11.40 crore shares will be made at an aggregate consideration of Re 1 since under the RBI circular, lenders can convert debt into equity at Re 1 when the book value per share of a company is negative.

Under the plan, lenders' nominees will be appointed to the board of directors of the airlines.

The BLPRP envisages the company receiving the requisite approvals from shareholders at their meeting scheduled to be held on February 21.

As of December 31, 2018, the airline's promoter- Naresh Goyal's stake was 51 percent while that of Etihad Airways was 24 percent. The airline's debt stood at Rs 8,052 crore as on September 30, 2018.

The BLPRP currently estimates a funding gap of Rs 8,500 crore (including proposed repayment of aircraft debt of Rs 1,700 crore) to be met by appropriate mix of equity infusion, debt restructuring, sale/sale and lease back/ refinancing of aircraft, among other things.

The proposed resolution plan will be presented to the consortium of lenders, overseeing committee of the Indian Bankers' Association, board of Etihad Airways and the promoter, for consideration.

The BLPRP also talks about sanctioning of appropriate interim credit facilities by domestic lenders.

The airline said implementation of the final bank-led resolution plan (BLRP) will take place under the guidance of a monitoring agency.

The implementation of the plan will be carried out after receiving approvals from Sebi, civil aviation ministry and Competition Commission of India, it said.

In the quarter ended December 31, 2018, the airline reported a standalone net loss of Rs 587.77 crore as against a net profit of Rs 165.25 crore in the year-ago quarter.