Jet Airways, hungry for cash, plans to raise around Rs 2,500 crore through a rights problem. Your lenders are also looking for a debt to equity conversion.
While lenders can convert Rs 1 billion of debt into equity, they will also participate in the infusion of capital through an issuance of rights as part of the agreement. In addition, promoter Naresh Goyal and Etihad Airways, which owns a 24% stake in the airline, will infuse around Rs. 2 billion into the airline, according to informed sources on the development.
It is expected that the lenders participate in an emission of rights to obtain capital. The state-owned infrastructure fund The National Infrastructure Investment Fund (NIIF) will probably buy a 19 percent stake for Rs 1,500 crore. Along with the IFRS, banks will have a 51 percent stake in the company.
The lenders approached the IFRS after Etihad Airways refused to increase its share beyond 25 percent without an exemption from the open offer. The Securities and Exchange Board of India (Sebi) did not agree with the idea. IFRS Executive Director Sujoy Bose did not answer several questions on the matter.
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The sources said that Etihad Airways would infuse around Rs 1,450 crore to maintain its participation at 24 percent, promoter Naresh Goyal would contribute Rs 550 crore to maintain between 21 and 22 percent.
Goyal has already infused millions of rupees into the airline.
“In the first stage of the resolution plan, the lenders agreed to convert around 1 billion rupees of debt into equity. In the second stage, there will be an emission of rights of around Rs 2,500 crore in which the banks will participate. This process is subject to the approval of the developer, the lenders and Etihad Airways. It may take around two months to close, “said an official at a state lender.
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Another source said that the consortium led by the SBI will launch around 500 million rupees in the next 15 days to close the immediate financing gap.
He said: “The draft resolution plan has been approved by Jet’s board and needs approval from the bank and Etihad boards. In addition, the approval of various regulatory authorities is also required. This would take a few months. There is an interim financing requirement of Rs 500-1,000 crore. The banks will conduct an evaluation and lend the fund against security. ”
The airline has a funding gap of Rs 8,500 crore. “There will be infusion of capital, sale or sale and lease, conversion of debt to capital and refinancing of aircraft. A combination of all this will help reduce the company’s debt. But I will not be able to give you the numbers right now, “said Amit Agarwal, chief financial officer of Jet Airways, on Friday.
On Thursday, the company’s board of directors approved a draft resolution plan, which includes the conversion of debt into 110.4 million shares.
Jet had a gross debt of Rs 7,654 crore at the end of December, comprising aviation loans in the amount of Rs 1,700 crore. About 60 percent of the loans are denominated in dollars. Jet called for an extraordinary general meeting next week to ensure shareholder approval for the issuance of 110.4 million shares to lenders.