Cash crunched-Budget Carrier Jet Airways, in its extra general meeting (EGM) on 21 February gave approval to the resolution plan for revival of the debt ridden airlines. About 98% of the stakeholder gave their approval nod to plan, which includes fresh infusion of funds, conversion of debt into equity and plans for rights issue.
In the meeting about 98% of stakeholders gave approval to the need for fresh allotment of around 144 million shares. About same number of them, nodded for the alteration in the Articles of Association, and amendment in the ‘Object Clause’ of Memorandum of Association of the company
Now with the approval, the SBI led consortium will initiate its earlier plan of converting debt into equity to take out the bank out of vicious debt cycle. If the conversion plan becomes reality then, 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.
Naresh Goyal who earlier owned the majority stake in the airlines, will now have about 24-25 % satke, while the stake of Foreign partner Etihad, will get reduced to 12% from the earlier 24%.
Along with this, the Airline will also be raising about Rs 2,500 Crore through rights issue. Both the major stake holder Goyal and Etihad Airways will also be infusing fresh capital.
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, earlier this week.
The infusion of funds is necessary for the Airline as it has around Rs 8,500 Crore debt and has to repay About Rs 1,700 before the end of this quarter.