Neither public shareholders nor Jet’s employees, except those retained by the new
owners, stand to gain anything out of the deal, experts said.
The committee of creditors of Jet Airways had last week approved the revival plan
of a consortium of Murari Lal Jalan, a non-resident Indian businessman based in
the UAE, and Kalrock Capital, a London-based asset management rm.
The National Company Law Tribunal, which is hearing the insolvency proceedings, is yet to approve the plan that
proposes to relaunch the full-service carrier with an initial investment of Rs 1,000 crore.
Jalan and Kalrock plan to split their holding in Jet in a ratio of 51-49, said resolution professional Ashish Chhawchharia
of Grant Thornton.
Discussions are on with Gulf carrier Etihad Airways on a new shareholding structure for the airline’s loyalty programme
subsidiary Jet Privilege, now named InterMiles, he said. Jet owns 49.9% of the company while the rest is owned by Etihad.
People aware of the development said the new owners will oer about 9% stake in the airline to lenders including SBI,
Yes Bank NSE 4.72 % and IDBI in lieu of their debt.
Chhawchharia said public shareholding in the airline will be completely clamped down for now. He didn’t specify
whether the new owners plan to delist Jet.
Experts said public shareholders don’t have much claim in a company facing insolvency.
“If the liquidation value of the corporate debtor is zero, it is up to the investor to oer anything to public shareholders in
the event the company is delisted or otherwise,” said Sumant Batra, a lawyer specialising in insolvency cases. “In an
Industry
insolvency resolution, it's completely up to the new investors how they want to structure the shareholding in the
company.”
While the earlier promoters are prohibited under the Insolvency and Bankruptcy Code, even the employees of the airline
have limited rights.
“Generally speaking, if the secured creditors, who stand ahead in the priority list, do not receive their full dues, it is to be
expected that other operational creditors, including employees, may not be entitled to receive much unless the investor
wants to retain some older employees and get into fresh negotiations with them,” said Batra, a former president of Insol
International, a London-based body of lawyers and accountants specialising in insolvency and turnarounds.
Meanwhile, Jet pilots’ union National Aviators' Guild will appeal to NCLT for a copy of the resolution plan and to be
heard before the plan is approved, the union’s counsel Jane Cox said.
NAG has 1,150 members, of whom 250 are still
employed with the airline.
Jet stopped operating in April 2019 bereft of cash and saddled with debt. NCLT admitted an insolvency case led against
the airline by its debtors in June 2019. Before the case, its founder Naresh Goyal held 51% stake while Etihad held 24%. As
of end June 2020, Goyal as promoter held 25% stake in Jet. Etihad as public shareholder held 24%, while lenders
(including Punjab National Bank holding 26%), insurance companies, overseas investors and retail investors held the
rest.
23/10/20 Economic Times
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