Chennai: Local lenders to cash-trapped carrier Jet Airways, led by State Bank of India, have proposed a $900 million resolution plan for turnaround of fortunes for the airlines, a report said.
According to Mint, the proposed plan comprises fresh equity infusion and restructuring of $450 million of its loans.
The Jet Airways’ turnaround 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 per cent, the media outlet reported.
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 per cent stake, the report said.
“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,” the report said, citing sources.
“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 31 March this year, which is well before the 180-day period under the Reserve Bank of India’s (RBI’s) 12 February circular,” it added.
According to the report, the lenders have also assured Jet Airways’ 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.
“As part of the restructuring, the lenders have also proposed a moratorium on repayments on loan facilities which are due till April,” the report cited one of the two sources who spilled the beans, as saying.
The circular relates to how lenders need to deal with stressed assets. It had mentioned that a resolution professional should be appointed within 180 days for defaulting accounts with aggregate exposure of Rs 2,000 crore and above.
It must be noted that after Jet Airways defaulted on its debt repayment on 1 January, ratings agency ICRA Ltd cut from C to D the long-term rating on loans and bonds issued by the airline. Jet has reported three consecutive quarterly losses of over Rs 1,000 crore each since the quarter ended March last year.
Also, talks with Tata Group ended over Goyal’s future role at the airline as the airlines tried to sell its stakes using the loyalty programme, that eventually drew interest from several private equity funds including the Blackstone Group and TPG Capital.
| Etihad to the rescue? |
| In December last year, it was reported that Etihad Airways 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 before April to meet repayment obligations and manage operating expenses. It is also expected that Goyal will cede operational control to Etihad, which can increase its stake to 49 per cent under the current regulation. |