SBI calls emergency meeting on Jet Airways to thrash out contentious issues

State Bank of India, which leads the consortium of lenders for Jet Airways, has called an urgent meeting of its members on Wednesday to thrash out contentious issues between promoter Naresh Goyal and his joint venture partner Etihad Airways as well as resolve other matters with the banks.

According to sources, top executives of both the companies are expected to come for the discussion. 

It is believed that Goyal, as well as Etihad group Chief Executive Officer Tony Douglas, has been invited for the meeting. 

Etihad, according to sources, wants the size of the rights issue to be increased to Rs 5,000 crore instead of Rs 4,000 crore as envisaged in the bank-led provisional resolution plan. That is because it wants to limit its exposure to Rs 1,400 crore and peg its stake in the company to its current level of 24 per cent. It wants banks and another financial investor (talks are on to bring in the National Infrastructure and Investment Fund) to bring in more funds — from the earlier planned Rs 2,000 crore now to Rs 3,000 crore.

It does not want to be designated promoter of the company. Instead, it wants Goyal to be the sole promoter, a condition not acceptable to him because he is on the brink of losing control of the management of the company and might not have board membership.

Etihad also wants Goyal to pledge his shares in Jet as well as Jet Privilege Pvt Ltd to the banks and raise money, again a move not acceptable to Goyal. 

The Gulf carrier has been pitching for the lenders and the new investor taking 51 per cent in the company. 

It has sought the right of first refusal after one year in the case of a sale of shares and has asked SBI to get an endorsement from the Securities and Exchange Board of India (Sebi) that in case it exercises this right, the mandatory open offer requirement will not be triggered. 

However, Sebi is not willing to make an exemption and neither is SBI willing to give the right of first refusal. 

A Jet Airways spokesperson, when contacted, said: “In line with its policy, Jet Airways does not comment on speculation”. 

An e mail query to Etihad did not elicit any response. 

However, in a joint statement on Monday Jet Airways and Etihad said they were working together on a resolution plan to make the airline robust and viable. Etihad Airways is learnt to have abstained from voting on resolutions to convert Jet Airways’ debt into equity in the extraordinary general meeting on Thursday. 
 

The airlines wanted clarity on all the questions they had raised before they endorsed the resolution plan.

The lenders, however, may seek additional securities, including share pledges or guarantees from promoters, while sanctioning loans, and are not planning to move the National Company Law Tribunal (NCLT) at present. A delay in clearing the resolution plan would make it difficult for the airlines to negotiate interim funding from banks. The lenders’ consortium is considering a Rs 500-crore loan, but a final decision is yet to be taken, Punjab National Bank Managing Director Sunil Mehta had said on Friday.