Jet Airways lenders float $900mn resolution plan
The plan, if approved, will reduce Naresh Goyal’s stake below 51%
MUMBAI: Local lenders to Jet Airways India Ltd, led by State Bank of India (SBI), on Tuesday proposed a $900 million resolution plan comprising fresh equity infusion and restructuring of $450 million of its loans, two people directly aware of the development said.
The plan, if approved by all stakeholders, will trigger a change in Jet Airways’ shareholding with founder chairman Naresh Goyal’s stake falling below the current 51%.
The resolution plan was shared with Jet Airways’ lessors and vendors at a meeting chaired by SBI and attended by the airline’s senior management, including Goyal and a representative of Etihad Airways PJSC, which holds a 24% stake, the people cited above said, requesting anonymity.
“While the finer details are still being worked upon, the broader contours entail that Naresh Goyal and Etihad will together infuse $450 million in the company while the Indian lenders will restructure another $450 million of the airline’s debt which is up for maturity between now and March this year,” said one of the two people cited above.
“The final plan will be put in place by the end of January and the lenders are hopeful that the resolution plan will be in force by March 31 this year which is well before the 180-day period under Reserve Bank of India’s (RBI) 12 February circular,” said the first person cited above.
The 12 February RBI circular relates to how lenders need to deal with stressed assets. The circular said a resolution professional should be appointed within 180 days for defaulting accounts with aggregate exposure of ₹2,000 crore and above.
Jet Airways defaulted on its debt repayment on January 1, following which rating agency Icra Ltd cut from C to D the longterm rating on loans and bonds issued by the airline which has reported three consecutive quarterly losses of over ₹1,000 crore each since the quarter ended March 2018.
“The lenders have also
THE RESOLUTION PLAN WAS SHARED WITH JET AIRWAYS’ LESSORS AND VENDORS AT A MEETING CHAIRED BY STATE BANK OF INDIA
assured Jet’s vendors and lessors that their dues will be cleared in three tranches till April, by which time the lenders expect the payment cycle to become regular,” said the second person.
“As part of the restructuring, the lenders have also proposed a moratorium on repayments on loan facilities which are due till April,” the second person said.
Mint reported on December 7 that Etihad has offered to guarantee loans worth $150 million for Jet Airways to keep the airline operational.
According to estimates, Jet Airways needs close to $500 million between now and April to meet repayment obligations and manage operating expenses.
“There is a possibility that Goyal may cede operational control to Etihad which can increase its stake to 49% under the cur- rent regulation,” said the first person cited above.
Requests for comments sent to Jet Airways and SBI remained unanswered until press time on Tuesday. An Etihad spokesperson said the airline “does not comment on rumour or speculation”.
Jet Airways, which has been facing financial turbulence for a while, has been in talks with potential investors to raise fresh equity.
The various fund raising options it has explored included a stake sale in its loyalty arm Jet Privilege and a stake sale in the airline to the Tata group.
While the stake sale in the loyalty business drew interest from several private equity funds, including TPG and Blackstone, discussions with the Tata group ended over Naresh Goyal’s future role in the airline.