Goyal did not pledge 51% stake in Jet Airways, say officials

Officials say he only gave an undertaking not to sell any of his stake in return for raising working capital debt from Punjab National Bank

Jet Airways chairman Naresh Goyal did not pledge his personal stake for a bank loan and only gave an undertaking that he would not sell his 51 per cent holding, the airline said on Wednesday.

Goyal had furnished a non-disposal undertaking to Punjab National Bank (PNB), one of the lenders which sanctioned a working capital loan to the airline. The airline disclosed it in a filing to the Bombay Stock Exchange on Tuesday.

It is established practice among banks to seek such undertakings from borrowers before sanctioning loans and is done to ensure a continuity in ownership. Taking a non-disposal undertaking is a normal practice, done to ensure owners do not change the management without lenders’ consent, said bank executives.

PNB officials said no fresh amount was sanctioned to the airline in recent months and the undertaking was given at the time of sanctioning the working capital facility.

The lender has a charge on the airline’s credit card receivables.

Goyal owns 51 per cent in the airline, which he founded in 1993. In 2013, Etihad Airways took 24 per cent stake in the airline and the rest is public shareholding.

Jet Airways has a total debt of about Rs 9,800 crore, in rupee and dollar denominations. This includes about Rs 6,000 crore of aircraft-related loans, term loans and working capital. The airline spends about Rs 1,000 crore on interest every year. The carrier raised a $150-million foreign loan from Gulf banks to refinance its high-cost debt. Owing to high operating costs, weak revenue growth, one-off maintenance expenses and an impairment charge, it had reported a record loss of Rs 4,129 crore for FY14.

The losses have put pressure on the airline in repaying creditors.

The auditors, Chaturvedi & Shah and Deloitte Haskins & Sells, said repayment of dues were delayed by as many as 60 days.

However, the airline has managed to clear the dues on the balance sheet as of May-end, according to its annual report for FY14.