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BOARD APPROVES DEBT RESOLUTION PROPOSAL Banks Get Pilot’s Seat in Jet, Goyal Loses Control

February 15, 2019 05:27 AM

COURTESY ET FEB 15

BOARD APPROVES DEBT RESOLUTION PROPOSAL
Banks Get Pilot’s Seat in Jet, Goyal Loses Control
FLIGHT PLAN FOR RESCUE SBI-led lenders to convert part of debt into equity, making them largest shareholders; Goyal’s stake to fall to 20% from 51%
Our Bureau

Mumbai:

Jet Airways founderpromoter Naresh Goyal is set to lose control of his beleaguered airline after the board approved a proposal allowing a consortium of banks to become the largest shareholder. The stake of Goyal, who founded the airline in April 1992, could drop to as low as 20% from 51% now while Etihad Airways — along with a partner — may eventually become the biggest shareholder.


Banks, led by State Bank of India, will convert a portion of their debt into equity, making them the largest shareholders, a statement from Jet said on Thursday.

The bank-led resolution plan (BLRP) is “to meet a funding gap of nearly ₹8,500 crore which is to be met by an appropriate mix of equity infusion, debt restructuring, sale/sale and leaseback/ refinancing,” the statement added.

While clarity is yet to emerge on how the deal will be ultimately structured, it is clear that Goyal is set to lose control.

Jet also announced its fourth straight quarterly loss, underlining the criticality of the resolution plan. The plan will have to be approved at the Jet shareholders’ meet on February 21.

Banks will convert the debt at a price of ₹1 in accordance with the Reserve Bank circular, which stipulates this price for companies whose book value is negative.

The shareholders’ meet will also increase Jet’s authorised capital. The airline said banks will be allotted 114 million shares. It didn’t specify how much debt would be converted to equity or how fresh funds would be raised

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