Etihad may not have voted as it has still not got the approval of its board for the resolutions
Jet Airways’ foreign joint venture partner, the Abu Dhabi-based Etihad Airways, abstained from voting on all the five resolutions put up for shareholders’ approval at the airline’s extraordinary general meeting (EGM) on February 21, people aware of the development told FE.
The resolutions put forth also included voting for approval of conversion of loan into shares or convertible instruments or other securities besides some changes in the Memorandum of Association of the company and also increase its authorised share capital from Rs 200 crore to Rs 2,200 crore.
Sources told FE that Etihad may not have voted as it has still not got the approval of its board for the above resolutions. Jet had informed the stock exchanges of the EGM on January 28. At its board meet on February 14 Jet Airways board approved a bank-led resolution plan (BLPRP) proposed by State Bank of India, the lead banker with maximum exposure to Jet.
According to the plan, the banks were to be issued 11.4 crore shares in Jet Airways, making them the largest shareholder in the struggling airline. A funding gap of Rs 8,500 crore was identified, to be be met through restructuring of debt, fresh capital infusion and monetisation of the airline’s aircraft assets.
What is important is that the plan needs an approval by all stakeholders including Etihad. It is also known that any plan that goes through for resolution of Jet’s financial woes will have to also have guarantees from Etihad.
Etihad that holds 24% in Jet is seen as an important partner willing to infuse fresh capital into the ailing airline and it has to be on board for any bank-led resolution plans to go forward and culminate into a deal.
Jet Airways did not respond to a query by FE but in a separate statement to the media it said: “Jet Airways, its principal shareholders, including Etihad Airways, and key financial stakeholders are working towards the finalisation and subsequent implementation of the Bank-led Provisional Resolution Plan (BLPRP) to ensure that the carrier emerges as a financially-strong and resilient airline. The approval of the BLPRP by the Board of Directors of Jet Airways last week was an important step in this direction”.
Working towards finalisation of BLPRP: Goyal, Douglas
In a joint statement issued Monday evening, Naresh Goyal and Tony Douglas assured that principal shareholders and key financial stakeholders are working towards the finalisation and subsequent implementation of the BLPRP to ensure that the carrier emerges as a financially strong and resilient airline.
“As we move forward, we are confident that once the BLPRP is finalised and implemented, Jet Airways will re-emerge as a viable and robust airline to reclaim its rightful place as airline of first choice for its customers,” the statement said.
In response to an FE query, an Etihad spokesperson, “We do not comment on rumour and speculation”.
In an earlier letter to SBI chairman Rajnish Kumar in January, Etihad CEO Tony Douglas had made it clear that Etihad will invest in Jet on its own terms and that it wants a complete exemption from an open offer for raising its stake beyond the current 24%. Sources had indicated to FE earlier that Etihad mulled putting in as much as Rs 1,500 crore in the struggling carrier provided the promoter Naresh Goyal exits or is reduced to a minority shareholder.
“Basically, Etihad does not want to be seen as supporting overtly the debt resolution plan. Generally, abstaining is seen as either apathy or a complete antipathy,” said Shriram Subramanian of InGovern, a proxy advisory and corporate governance firm.
“Etihad’s not voting can be seen as either blowing up into a bigger issue between the two partners or it could just pass over and the proposed transaction will be completed smoothly,” said Amit Tandon, founder and MD, Institutional Investor and Advisory Services.