Jet Airways climbs 9% after lenders take control of the board

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Jet Airways will use the fresh funding to partly repay its stakeholders.




Jet Airways shares continued to see buying interest, rising another 9 percent in the morning trade on March 26 after lenders took control of company's board and Naresh Goyal stepped down as Chairman.

The stock was quoting at Rs 272.30, up Rs 17.80, or 6.99 percent on the BSE, at 0933 hours IST.

Jet Airways founders, Naresh Goyal, and wife Anita Goyal stepped down from the board of the cash-strapped airline on March 25. With this, Naresh Goyal ceases to be Chairman.

Apart from the Goyals, one nominee of Etihad Airways PJSC, Kevin Knight has also stepped down from the board, Jet Airways said in its BSE filing after its board meeting. Two nominee directors representing lenders have been inducted into the board.

The board also approved the issue of 11.4 crore equity shares to the lenders upon conversion of Re 1 of the outstanding debt. Lenders will infuse up to Rs 1,500 crore via debt instruments.

The board also approved the constitution of an Interim Management Committee to manage and monitor the daily operations and cash flow of the company.

"The Rs 1,500 crore is a fully secured, priority, interim funding for two months that we believe is good enough to normalize operations of the airline before it is sold," SBI Chairman Rajnish Kumar told CNBC-TV18 in an interview. "In return, lenders are getting a 51 percent stake, which itself is worth over Rs 1,500 crore," he added.

Joint venture partner Etihad's stake will be brought down to 12 percent from 25 percent and Naresh Goyal will now hold 25 percent, Kumar said.

Expression of interest for bids will be floated by April 9 and the deadline for binding bids is April 30, Kumar said, adding, a new investor is expected to be on board by May 31. "There is no legal bar on anyone with a funding and revival plan in place. The option is open for anyone including Naresh Goyal and Etihad to bid for the stake," Kumar said.

Jet Airways will use the fresh funding to partly repay its stakeholders.

The airline will start taking back its grounded fleet from later this week, and 'normalcy' may be restored within two months.

"The airline will leverage the funding to partly clear pending dues towards lessors, vendors, creditors and employees in a phased manner. The move will see Jet Airways re-deploy several of its grounded aircraft back into its network, helping renew many of the routes it had temporarily suspended, which will help restore normalcy of operations...," the company said.

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