Naresh Goyal ready to put Rs 700 cr in Jet; lenders discuss restructuring

Jet Airways Chairman Naresh Goyal says this is subject to the condition that his shareholding post such infusion is at least 25%

Jet Airways Chairman Naresh Goyal has told the State Bank of India (SBI) that he is ready to invest up to Rs 700 crore in the airline on the condition that his stake does not fall below 25 per cent.

Meanwhile, SBI on Thursday said lenders to Jet are considering a plan toward resolving the airline's debt woes, amid increasing prospects of a bailout by major shareholder Etihad Airways.    

Goyal's offer comes against the backdrop of strategic partner Etihad reportedly putting forward strict conditions, including that Goyal should give up control, for infusing funds into the crisis-hit carrier. In a letter to SBI Chairman Rajnish Kumar, Goyal said he is writing with reference to the resolution plan under discussion and in view of Etihad's position, "despite the significant cash crunch and imminent grounding, which the airline is facing".

Goyal said he is committed to an "infusion of funds into the company to the extent of Rs 700 crore" and pledging all his shares. This is subject to the condition that his shareholding post such infusion is at least 25 per cent, he said in the letter which was seen by PTI.   

"Should this not be possible, then I would not be able to infuse any funds or pledge my shares, unless Sebi accords me an exemption permitting me to increase my reduced stake (if it is to be below 25 per cent) without triggering the Takeover Code," as per the letter. 
 

For its part, the SBI statement elaborates on Jet comments made on Wednesday, in which the airline said a plan, involving a cash injection by stakeholders and board changes, was under discussion. 

"SBI would like to state that lenders are considering a restructuring plan under the RBI framework for the resolution of stressed assets that would ensure long-term viability of the company," the state-owned bank said in a statement, referring to the Reserve Bank of India (RBI).

SBI's executive committee was scheduled to meet on Thursday to discuss the plan, news channel BTVI reported, citing unidentified sources. The restructuring of loans extended by SBI is subject to Jet finding a strategic partner, BTVI also said. The bank, in its statement, said any resolution plan would be subject to clearance by the central bank, market regulator and the civil aviation ministry, as well as approval from the airline's board and all of its lenders. 

Representatives of Jet and Etihad were due to meet creditors, led by SBI, in Mumbai on Wednesday to discuss a proposal that involved Etihad increasing its stake, a person familiar with the matter previously told Reuters. The outcome of the meeting is not known. 

The latest statements from SBI and Jet came after another news channel, CNBC-TV 18, reported on Wednesday that Etihad had offered to buy Jet shares at a 49 per cent discount to their trading price and immediately pump $35 million into the troubled carrier, citing a letter to SBI from the Abu Dhabi airline's Chief Executive Tony Douglas.

Etihad also wants Jet's founder and Chairman Naresh Goyal to step down from the board and reduce his stake to 22 per cent from 51 per cent, CNBC-TV 18 reported.

India's civil aviation secretary, R N Choubey, told reporters on the sidelines of a conference on Wednesday that ownership and control of Jet would need to remain in domestic hands.

Jet controls over a sixth of a market experiencing an unprecedented boom in air travel. Yet high fuel taxes, a weak rupee and price competition have squeezed profitability, leaving Jet with Rs 8,052 crore ($1.13 billion) in net debt as at the end of September and defaulting on payments.

The airline owes money to banks, employees, vendors and lessors -- some of which are exploring taking back aircraft after crisis talks with the cash-strapped airline failed to ease a row over late payments, sources previously told Reuters.

Shares of Jet Airways fell for the second straight session Thursday, plunging over 5 per cent, amid continued uncertainty over the revival plan of the company.

The scrip declined 5.31 per cent to Rs 256.60 on BSE. On NSE, shares of the company slumped 4.93 per cent to Rs 256.40.

The stock has been falling since Wednesday and, in the process, its market valuation has been eroded by Rs 365.48 crore in two days on BSE.