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Jet Airways Ltd. has agreed to trade majority stake to the lender in order to rescue the debt-ridden airline. The airline in its stock exchange filing said that the board, as part of a provisional resolution plan, has agreed to allot 11.4 crore shares at an aggregate value of Re 1 to the lenders’ consortium led by State Bank of India.
Jet Airways while asserting that through the conversion, the lenders will end up owning 50.1 per cent in the full-service carrier, stated: “…under the RBI Circular, lenders can convert debt into equity at Rs 1 when the book value per share of a company is negative.”
Accordingly, to the conversion plan, Naresh Goyal and Etihad Airways will witness their stakeholding in the airline reduced in half to 25 per cent and 12 per cent, respectively. The resolution plan will also grant the lending consortium the power to nominate members on the board.
The airliner has called for an extraordinary general meeting on February 21 for shareholder approval for issue of additional shares. The airline is also reported to be under a debt of over Rs 10,900 crores and has defaulted on repayments and struggled to pay salaries as higher fuel prices and low fares in a competitive market left it short of cash.
