Lenders consortium led by the State Bank of India (SBI) may become the largest Stakeholder in the cash-crunched, Jet Airways. In a move to give bailout to Naresh Goyal led airlines, SBI along with other lenders is mulling over a plan to convert the debt owned by Jet Airways into an equity. The consideration for this conversion will be ₹1 as per RBI norms.
“…under the RBI Circular, lenders can convert debt into equity at Rs 1 when the book value per share of a company is negative,” the Jet Airways statement said
The details of the deal are yet to be made public including the amount of fund infusion and the new shares of the different stakeholders. But sources close to matter say the majority stake owned by Goyal can be halved, while the 24% stake of foreign partner, Etihad Airways is likely to remain intact.
The SBI led lenders consortium will own a majority- 51% stake in the airline and can bring change in the board composition, as per the negotiations which are in the final stage. The issue whether Naresh Goyal would remain on the board or not is yet to be finalised. Jet Airways has called for an extraordinary general meeting (EGM) on 21 February which will definitely bring more clarity regarding this conversion deal, the share of stakeholders and the infusion of fresh funds.
Jet Airways is the second largest Indian airline after Indigo in terms of market share. The airline is grappling with lack of fund, mounting debt in the wake of cutthroat competition by the market leader Indigo.