Thursday, March 14, 2019

'Perpetuity’ clause stalls Jet Airway’s new flight plan

New Delhi: The Jet Airways revival plan has stalled over promoter Naresh Goyal’s insistence that his shareholding shouldn’t be capped at 22 per cent in “perpetuity”.
This had been one of Etihad’s conditions for providing funds to the airline, which needs Rs 750 crore immediately. The board of the Abu Dhabi carrier, which has a 24 per cent stake in Jet, hasn’t approved the funding because of Goyal’s insistence on waiver of the clause, said people with knowledge of the matter. On the other hand, Indian banks have refused to infuse any money until the promoter stake is cut from the current 51 per cent .
“Etihad’s first condition was limiting Goyal’s stake to 22 per cent or below and was agreed upon in the memorandum of understanding (MoU) but a waiver sought later has led to Etihad pulling back on funding,” said one of those cited above.
Any restructuring plan hinges on Etihad infusing capital and unless that happens there will be no deal, according to the bankers.
According to the plan, the airline is set to get an infusion of Rs 4,000 crore from various stakeholders but has received only Rs 250 crore from Naresh Goyal thus far.
A relaxation in the 22 per cent cap would give Goyal a chance to regain control of the airline, which has been forced to cancel flights as 53 planes have been grounded because lease rentals haven’t been paid. The stock fell 1.3 per cent to Rs 237.80 on Thursday. The lenders want Goyal’s exit clause formalised before any fresh funding is provided, according to two senior bankers aware of the development.
14/03/19 Mihir Mishra/Dheeraj Tiwari/Economic Times