Private carrier Jet Airways, which has been struggling to mop-up funds for nearly two years, said it will be raising $200 million in the coming 3-4 weeks through the QIP route. The airline also has plans to go back to the market in May or June to raise another $200 million.
M Shivkumar, senior vice-president (finance), Jet, said the first tranche of funding would be through placement of shares with institutions. ?With that, we should be able to raise around Rs 1,000 crore.? Jet?s total debt as of December 2009 stands at Rs 14,200 crore and the company?s debt-equity ratio is about 7:1?. The company is believed to have borrowed at an interest rate of around 9 %.
K. G Vishwanath, vice-president, Commercial Strategy, Jet, added the airline has not yet finalised lead managers for the QIP placement. ?The QIP will be priced in line with market expectations,? he said.
Jet, which operates 106 aircraft, has also deferred the purchase of 13 aircraft for two years. Had it bought the aircraft, the debt would have been higher by Rs 7,500 crore. The company is spending nearly Rs 800 crore annually to service the debt. According to one domestic brokerage, it?s possibel the Jet isssue would be priced in the region of 420-450 per share. On Tuesday, the stock closed at 487 per share on the Bombay Stock Exchange. The stock price had reached an all-time low of Rs 115.25 on March 12, 2009.
The board of directors at Jet approved of a fund raising programme in July 2009 and in December it got an approval from the Cabinet Committee on Economic Affairs (CCEA) to raise $400 million through sale of fresh shares to qualified foreign institutions. Simultaneously, the carrier is also aggressively looking at cost cutting measures to boost its operational efficiencies.
The carrier, which has seen a 19% increase in its passenger traffic in January, believes it could reduce 5-10% expenses over the next 12-months.