Saturday, February 16, 2019

Banks, NIIF and Etihad to restart Jet engine with Rs 3,400 crore infusion

A consortium of banks, along with the National Investment and Infrastructure Fund (NIIF) and Etihad, will invest about Rs 3,400 crore in Jet AirwaysNSE 2.94 %, leading to a much-reduced holding for founder Naresh Goyal, a change in management control and lenders with the biggest stake. Following the infusion, which will be in phases, the consortium of banks, led by State Bank of India, will own 32% of the airline and Abu Dhabi-owned Etihad and the NIIF will hold about 24.9% and 19.5%, respectively, said a person with knowledge of the matter.

Goyal’s stake will drop to 20% from 51%, stripping him of board membership and management control, the person said. He will, however, retain his status as promoter.EThad reported on Friday that Goyal’s stake was likely to drop to this level.
“Both NIIF and Etihad funds will be converted into equity at a rate of Rs 150 per share,” said the person. A waiver from the Securities and Exchange Board of India for a subsequent public offer won’t be required because Etihad’s stake won’t increase beyond 25% even after the equity infusion. The banks will get their stake in the company at Rs 1 per share.
Jet Airways ended at Rs 232.55 on the BSE Friday, up 3%. The carrier didn’t respond to queries.

On the Jet Airways earnings conference call Friday, the management declined to say who would be promoter after the change in ownership structure. “Jet Airways will continue the structure of a professionally run management reporting to the board of directors,” CEO Vinay Dube said.
The person cited above pointed out that the Abu Dhabi Investment Authority (ADIA) has contributed a big chunk of the NIIF, which is anchored by the government of India. Etihad has reportedly told the banks that it wants Goyal out of the board and that its share of infusion be converted into shares at Rs 150 a piece.
The carrier’s total debt amounts to about Rs 8,400 crore. As part of the deal, about Rs 6,000 crore of what it owes will be converted into long-term debt by the banks to be repaid over a period of 10 years. A substantial part of the infusion will be used to repay debt and meet other operational costs including salaries.
16/02/19 Mihir Mishra/Economic Times