Saturday, February 09, 2019

Hope floats: Jet Airways lenders may have agreed to convert Rs 4,000 cr debt

Lenders to financially struggling Jet Airways are understood to have agreed to convert Rs 4,000 crore — nearly half of the airline’s gross debt of Rs 8,411 crore (as on September 30 2018) — to equity at Rs 1,sources close to the development told FE. The lenders will get equity equivalent to this swap in Jet. It is also understood that there will be fresh infusion of capital of about Rs 650 crore by the lenders. How much will the lenders hold post this restructuring in Jet could not be immediately ascertained but some reports earlier suggested that SBI will hold nearly 15% post the resolution plan is implemented. SBI did not respond to a query by FE on the same.

The ongoing restructuring or the resolution plan, with SBI as the lead lender, is being worked within RBI’s February 12, 2018 resolution framework for stressed assets under which lenders can convert debt into equity at a discount to the market rate and under Sashakt, a five-pronged strategy proposed last year by a clutch of bankers to resolve bad loans.

In a media interaction on Jet’s debt restructuring, SBI chairman Rajnish Kumar had said, “The outline is ready but implementation depends on government and regulatory approvals.” The key stakeholders and Jet lenders met on January 8 in Mumbai to work out a broad plan agreeable to lenders, airline promoter Naresh Goyal and also Jet’s foreign airline partner, the Abu Dhabi-based Etihad Airways that holds 24% in Jet.
09/02/19 Manisha Singhal/Financial Express