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Dubai: The plan submitted to the National Company Law Tribunal by the UAE-based investor Murair Lal Jalan and London’s asset management firm Kalrock Capital pledges the infusion of Rs3.8 billion in phases in the first two years after the re-launch of the embattled airline and follow it up with an additional Rs5.8 billion over the next three to five years.
The plan was submitted by the consortium following its selection by Jet’s committee of creditors last month. As per the plan, lenders to the embattled carrier will get 9.5 per cent and 7.5 per cent stake respectively in the airline and its passenger miles company after subjecting to a 90 per cent haircut on their loan exposure. Financial creditors will also reportedly get 10 per cent free cash flows.
Upon approval of the resolution plan by NCLT, the consortium plans to commence operations with six aircraft domestically, then adding one aircraft each month, and plans to expand the fleet to 120 aircraft in five years.
Beset by severe cash crunch and mounting debts, Jet Airways, India’s largest private sector airline, was forced to stop operations in April 2019 and was admitted in NCLT, through a case filed by its lenders in June.
According to sources, creditors of the airline have claimed dues to the tune of 250 billion, of which the resolution professional has admitted total claims of Rs221.67 billion including Rs74.6 billion from financial creditors.
Since the airline is facing insolvency, public shareholders will not gain anything out of the deal. Before the insolvency case, Jet’s founder Naresh Goyal held 51 per cent stake while Etihad Airways held 24 per cent. As of end June 2020, Goyal as promoter held 25 per cent stake in Jet. Etihad as public shareholder held 24 per cent, while lenders hold 26 per cent, insurance companies, overseas investors and retail investors held the rest.
08/11/20 Issac John/Khaleej Times
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