Shareholders of Jet Airways have given their nod for conversion of the airline’s debt into equity, and the appointment of lenders’ nominees on the board. The members approved five enabling resolutions in an extraordinary general meeting (EGM) on Thursday, which will pave the way for an issuance of 114 million shares to lenders as part of the resolution plan.
The resolutions received support of 97-99 per cent of voting shareholders. Other proposals included increasing the authorised share capital of the company, and amendments to the airline’s article of association. The voting result was notified on Friday evening. Founder-Chairman Naresh Goyal did not attend the EGM.
Last week, the board approved a draft resolution plan that sought to raise Rs 8,500 crore through various options, including issuance of fresh shares and sale of aircraft, among others. Lenders will receive 114 million shares upon conversion of debt for Rs 1 and secure 50 per cent stake in the carrier. Approvals from various lenders are expected beginning the first week of March.
The airline is facing a cash crunch, leading to delayed salary disbursements and vendor payments. Fund infusion will take place only after the receipt of board and regulatory approvals — a process that could take around three months.
The airline is seeking interim funding of Rs 500-1,000 crore as this will enable it to continue with regular operations. State Bank of India and Punjab National Bank are likely to offer the fresh debt and will seek security against it.
The airline is expected to raise close to Rs 2,500 crore through a fresh issue of shares. Lenders are expected to participate in a rights issue to raise capital and government-owned infrastructure fund, National Infrastructure Investment Fund (NIIF), is likely buy 19 per cent stake for Rs 1,500 crore.
Together with NIIF, banks will own 51 per cent of the company. Promoter Naresh Goyal and partner Etihad Airways, which owns 24 per cent stake in the airline, will infuse close to Rs 2,000 crore in the airline.