Mumbai/New Delhi: Jet Airways founder and chairman Naresh Goyal has agreed to step down from the airline's board and relinquish decision-making powers, with his shareholding slated to fall below 20% from 51%, multiple people in the know told ET.
Goyal is likely to be replaced on the board by his son, Nivaan, who will represent his stake. Goyal agreed to this after the airline’s top lender, State Bank of India, in a meeting on Thursday insisted that Goyal and Etihad Airways, which owns a 24% stake, resolve their stalemate over shareholding before the airline makes a fresh issue of shares. The share issue is part of a resolution plan to revive the airline which is facing a cash crunch. Jet and Etihad didn’t respond to emails seeking comment, before the story went to press.
Jet has said it required Rs 8,500 crore, which would be provided through a mix of equity infusion, debt restructuring and sale, sale and leaseback or refinancing of aircraft, among other measures. Earlier, banks and the shareholders had agreed to put in Rs 4,000 crore as equity through a rights issue of shares. In Wednesday's meeting, this proposed investment was raised to Rs 5,000 crore, said one of the people cited above.
As part of the resolution plan, Jet plans to increase its authorised share capital by 11 times to Rs 2,200 crore. This would constitute Rs 680 crore of equity capital and Rs 1,520 crore of preference share capital. Jet lenders will become the largest shareholders in the company, according to the plan. In the next step, fresh shares will be issued through a rights offer and the shareholding rejigged based on how much each shareholder subscribes.
In the meeting on Thursday, the lenders asked Etihad to put in a “bridge funding” of Rs 750 crore, but the Abu Dhabi-based airline didn’t agree.
01/03/19 Anirban Chowdhury/Economic Times
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Goyal is likely to be replaced on the board by his son, Nivaan, who will represent his stake. Goyal agreed to this after the airline’s top lender, State Bank of India, in a meeting on Thursday insisted that Goyal and Etihad Airways, which owns a 24% stake, resolve their stalemate over shareholding before the airline makes a fresh issue of shares. The share issue is part of a resolution plan to revive the airline which is facing a cash crunch. Jet and Etihad didn’t respond to emails seeking comment, before the story went to press.
Jet has said it required Rs 8,500 crore, which would be provided through a mix of equity infusion, debt restructuring and sale, sale and leaseback or refinancing of aircraft, among other measures. Earlier, banks and the shareholders had agreed to put in Rs 4,000 crore as equity through a rights issue of shares. In Wednesday's meeting, this proposed investment was raised to Rs 5,000 crore, said one of the people cited above.
As part of the resolution plan, Jet plans to increase its authorised share capital by 11 times to Rs 2,200 crore. This would constitute Rs 680 crore of equity capital and Rs 1,520 crore of preference share capital. Jet lenders will become the largest shareholders in the company, according to the plan. In the next step, fresh shares will be issued through a rights offer and the shareholding rejigged based on how much each shareholder subscribes.
In the meeting on Thursday, the lenders asked Etihad to put in a “bridge funding” of Rs 750 crore, but the Abu Dhabi-based airline didn’t agree.
01/03/19 Anirban Chowdhury/Economic Times
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