Jet crisis: Lenders to pursue Bank-Led Resolution Plan for sale of stake
Mumbai, Apr 4 (IBNS): The Lenders of Jet Airways (India) Limited met on Thursday to take stock of the current situation of the company.
The lenders intend to pursue the Bank-Led Resolution Plan for sale of stake in the company in a time-bound manner under the present legal and regulatory framework and intend to invite expressions of interest.
This will be invited on April 6 and will need to be submitted by April 9.
The lenders are cognizant that the outcome of the efforts of the lenders will depend on the interest shown by the parties on sale of stake in the company.
Whilst all efforts will be made for the stake sale by the lenders, other options may be considered by them should these efforts not result in an acceptable outcome.
As the Airline is struggling for its survival, its shares declined over 5 per cent on Wednesday.
In the last five days, the stock of cash-strapped Jet Airways has come off by 8 per cent to Rs 254.55, said reports.
According to an Economic Times report, "Jet Airways’ domestic operations now comprise 12-15 planes, making it the smallest operating pan-Indian carrier and also, according to industry experts, ineligible to fly on international routes."
Meanwhile, the company has also defaulted on Indian and overseas loan repayments, vendor dues and has been unable to pay salaries to its employees.
"Banks were to release an immediate additional debt funding of Rs 1,500 crore for Jet to tide through and part-pay its vendors and employees, but the funds have not been released yet," the Economic Times report added.
Rs 1,500 crore bailout for Jet Airways
The resignation of Jet Airways founder Naresh Goyal and his wife Anita Goyal on Monday from the board of the airline has cleared the way for a Rs 1,500 crore bailout by a consortium of banks led by State Bank of India.
The bank are converting their debt into equity by taking a controlling stake in the 25-year-old airline for a token sum of Re 1.
In a statement, Jet Airways said as a sustainable solution to restore normality to the operations of the airline, its board took approved the following proposals:
1. The conversion of INR 1 of Lenders’ debt into equity by the issuance of 11.4 crore equity shares, in accordance with the RBI Circular of 12th February, 2018. With this, the consortium of Indian lenders, led by State Bank of India (SBI), will become the majority shareholders of Jet Airways.
2. Reconstitution of the Board of Directors of the company by:
o Resignation of Promoter, Mr Naresh Goyal, Mrs. Anita Goyal, and Mr. Kevin Knight, nominee director of Etihad Airways from their positions on the Company’s Board.
o The two nominees of the Promoter and one nominee of Etihad Airways will continue on the Board.
o Two lender nominees will be inducted to its Board, subject to the receipt of requisite approvals.
As part of the Resolution Plan, the lenders will provide an immediate interim funding support of Rs 1500 crore to Jet Airways. The company will also engage with payment intermediaries for release of trapped cash. The airline will leverage the funding to partly clear pending dues towards lessors, vendors, creditors and employees in a phased manner.