Restructured Jet Airways will effectively be a 51 per cent government fund and PSU banks-owned. Sources said SBI-led lenders will convert £60 million loan into equity at Re 1, which will take their stake to 32 per cent. National Investment and Infrastructure Fund (NIIF), an investor-owned fund manager anchored by the government of India will pick up 19.5 per cent, and invest £140 million, they said. This will collectively get 51.5 per cent control with PSU banks and NIIF. It is learnt Abu Dhabi-based Etihad, which currently has 24 per cent stake in Jet, will invest another £140 million, limiting its stake at 24.9 per cent and avoiding an open offer.
Etihad is expected to pick up the additional equity at Rs 150 per share. Incidentally, the Abu Dhabi Investment Authority is one of the investors in NIIF, which was set up for building infrastructure but is now bailing out the airline. Jet's remaining debt of £600 million will be restructured and converted into long term 10 year debt. After this restructuring, Naresh Goyal's stake will fall from 51 per cent to 20 per cent. While he will remain promoter, Goyal will lose board seat and managerial control.
Last week, the Jet board had cleared a “bank-led provisional resolution plan” (BLPRP) which will see SBI-led lender banks becoming its largest stakeholder after debt restructuring. Under this plan, Jet will see £170 million aircraft debt, through steps like conversion of debt to equity, equity infusion and asset monetisation. Lenders have proposed to convert debt to equity at Re 1 and provide emergency funding.
“Conversion of lenders” debt into 11.4 million shares of Rs 10 each by allotment of such number of equity shares to the lenders that would result in the lenders becoming the largest shareholders in the company. Such allotment of 11.4 million shares will be made at an aggregate consideration of Re 1 since under the RBI circular, lenders can convert debt into equity at Re 1 when the book value per share of a company is negative,” Jet had said while announcing its Q3 results. The board of struggling Jet Airways, which recently defaulted on debt repayment, has agreed to give lenders the majority stake of 50.1 per cent by converting part of its debt into equity as part of a resolution plan worked out by lenders.