On Thursday, Jet Airways approved a bailout plan after reporting consecutive losses in the last three quarters.
This Bank-led Provisional Resolution Plan (BLPRP) will allow lenders to convert loans they gave Jet to equity and become shareholders of the airline.
The approved bailout plan will be funnelling Rs 8,500 crore into Jet with a mix of equity infusion, debt restructuring, refinancing of aircraft, and others, says the company in an official press release.
The Jet Airways board has agreed to gives its lenders, namely SBI, a 50.1% ownership stake in the bailout plan. Under this deal, SBI will be allotted 11.4 crore shares at a value of Re 1, and it will have the power to nominate members for a seat on the Board of Directors.
The plan also allows a sanctioning of interim credit facilities on terms that are in agreement with government requirements. “The BLPRP envisages the company receiving the requisite approvals from shareholders at their meeting scheduled on February 21,” says Jet.
Other shareholders’ equity will be diluted in the process: Chairman Naresh Goyal will own 25% and Etihad Airways will own 12%. Both have reduced their ownership stake by half.
Jet Airways CEO Vinay Dube said, “Jet Airways continues to make steady progress on its operational and financial turnaround, and with today’s approval of the BLPRP by its Board of Directors, we remain confident of delivering a more strategic, efficient, and financially viable airline.”
Like its contemporaries, Jet Airways became another Indian airline trying to keep its head above the water amidst heavy financial troubles. The airline defaulted on debt repayment and reported a net loss of Rs 732 crore in the third quarter.
Last August, Jet vocalised concerns about its funding and cut employee salaries by 25%. Then, in September, the airline only managed to pay 84% of its employees.
16/02/19 Rhea Arora/Qrius
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This Bank-led Provisional Resolution Plan (BLPRP) will allow lenders to convert loans they gave Jet to equity and become shareholders of the airline.
The approved bailout plan will be funnelling Rs 8,500 crore into Jet with a mix of equity infusion, debt restructuring, refinancing of aircraft, and others, says the company in an official press release.
The Jet Airways board has agreed to gives its lenders, namely SBI, a 50.1% ownership stake in the bailout plan. Under this deal, SBI will be allotted 11.4 crore shares at a value of Re 1, and it will have the power to nominate members for a seat on the Board of Directors.
The plan also allows a sanctioning of interim credit facilities on terms that are in agreement with government requirements. “The BLPRP envisages the company receiving the requisite approvals from shareholders at their meeting scheduled on February 21,” says Jet.
Other shareholders’ equity will be diluted in the process: Chairman Naresh Goyal will own 25% and Etihad Airways will own 12%. Both have reduced their ownership stake by half.
Jet Airways CEO Vinay Dube said, “Jet Airways continues to make steady progress on its operational and financial turnaround, and with today’s approval of the BLPRP by its Board of Directors, we remain confident of delivering a more strategic, efficient, and financially viable airline.”
Like its contemporaries, Jet Airways became another Indian airline trying to keep its head above the water amidst heavy financial troubles. The airline defaulted on debt repayment and reported a net loss of Rs 732 crore in the third quarter.
Last August, Jet vocalised concerns about its funding and cut employee salaries by 25%. Then, in September, the airline only managed to pay 84% of its employees.
16/02/19 Rhea Arora/Qrius
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