Indian budget airline Jet Airways is now planning to raise ₹2,500 Crore through rights issue. The cash-crunched airline is looking for infusion of some fund and this new plan of rights issue is part of that. Along with this the airline is also mulling over other options like, debt to equity conversion.
Rights issue or rights offering is an issue of shares offered at a special price by an entity to its existing stakeholders in accordance to the proportion of their previous stakes.
SBI led lenders consortium will be converting airline’s ₹1000 Crore debt into equity. Naresh Goyal and its foreign partner Etihad Airline will infuse ₹1000 Crore each as per the sources close to the ongoing development.
NIIF (National Infrastructure Investment Fund) can also buy 19% shake in the company, which will help it raise around ₹1,500 Crore.
“At the first stage of the resolution plan, lenders have agreed to convert around ₹1,000 crore of debt into equity. In the second stage, there will be a rights issue of around ₹2,500 crore in which banks will participate. This process is subject to approval from the promoter, lenders and Etihad Airways. It may take around two months to close,” said an official of a state-owned lender.
Jet Airways needs a funding of ₹8,500 crore. “There will be equity infusion, sale or sale and leaseback, debt-to-equity conversion, and refinancing of aircraft. A combination of all these will help to reduce the debt of the company. But, I will be unable to give you the numbers right now,” said Amit Agarwal, chief financial officer at Jet Airways, on Friday.
Now to raise capital, founder and majority stakeholder Naresh Goyal may lose half of his stake and Lenders consortium led by the State Bank of India (SBI) is expected to become the largest Stakeholder in the cash-crunched, Jet Airways.
Read: To Bailout Jet Airways, SBI led consortium likely to become majority stakeholder