Rs 1,500 crore bailout for Jet Airways
New Delhi, Mar 25 (IBNS): 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.
The move will see Jet Airways re-deploy several of its grounded aircraft back into its network, helping renew many of the routes it had temporarily suspended, which will help restore normalcy of operations, aiding the airline’s long term transformation to continue expansion and to regain its position as a global player, the airline's statement said ading that an Interim Management Committee (IMC) had been constituted to oversee the overall financial and operational performance of the airline under the overall supervision of the Board of Directors with the support of McKinsey & Co.
As part of the resolution plan, the lenders will also begin the process of sale/issue of shares to new investors which is expected to be completed in the June quarter, the airline said.
“For me, the 22,000 employees are my own family, as dear to me as Nivaan, Namrata and my wife Neeta, and no sacrifice is too big for me to safeguard the interest of Jet Airways and the families of the 22,000 employees. For the sake of my family of 22,000 employees and their respective families I have today taken the step of stepping down from the Board of Jet Airways," Naresh Goyal said.
Jet Airways currently operates flights to 56 destinations in India and abroad.
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