Jet seeks nod to approach overseas investors for funds

New Delhi: Jet Airways, which recently suffered the worst pilot strike, has sought the government’s permission to sell shares to overseas investors to avoid loan defaults and violation of debt covenants, as they may not be able to raise entire funds through equity route from domestic investors.
“The company cannot afford to have a financial crisis impacting its operations, which may have negative cascading effect in terms of sustenance of 13,000 employees, besides defaulting on payment obligations and violating the covenants prescribed by the various lenders,” the company said in a letter to the Foreign Investment Promotion Board (FIPB).
A Jet Airways spokesman was not available for comment. Jet, like most of its rivals, such as Kingfisher Airlines and SpiceJet, is suffering from high debt and spiralling costs. Although distressed investors, such as Wilbur Ross, have bought stakes in budget carriers, most investors shun airline stocks due to high operational costs and poor profitability outlook.
After many months of planning to raise funds, Jet, in August, passed an enabling resolution to raise $400 million through QIP, GDR, FCCB, follow-on public offer, rights issue or fully-convertible debentures.
24/09/09 Arun Kumar/Economic Times

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Categories: Foreign Sep 2009, Jet Airways Sep 2009