Relief finally for Jet Airways; shareholders clear all proposals from carrier

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Updated: February 23, 2019 7:20:20 AM

Jet Airways on Friday said its shareholders have approved with majority all the proposals put forth by the company, voting for which happened at the extraordinary general meeting on Thursday.

Jet shareholders clear all proposals put by carrierJet shareholders clear all proposals put by carrier

Jet Airways on Friday said its shareholders have approved with majority all the proposals put forth by the company, voting for which happened at the extraordinary general meeting on Thursday.

Shareholders approved the conversion of debt into equity that was sought by the airline, as this is required for the ongoing debt restructuring and resolution plan, and for share swap of debt into equity by the banks. Shareholders also approved and authorised the company to increase its share capital from Rs 200 crore to Rs 2,200 crore, and also the alteration to the articles of association of the company.

As is known, on February 14, the Jet board had approved a bank-led resolution plan (BLPRP) received from the State Bank of India, which is the lead lender, under the RBI circular of February 12, 2018.

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In the next stage, the BLPRP will be presented for consideration and approval to the consortium of lenders, the overseeing committee of the Indian Bankers’ Association, the board of directors of Etihad Airways, and the promoter of Jet Airways. It would also require the approval of the Sebi, Ministry of Civil Aviation, and the Competition Commission of India.

The resolution plan includes infusion of funds, restructuring of debt and monetisation of assets. The BLPRP, which has estimated a funding gap of around `8,500 crore (including proposed repayment of aircraft debt of around `1,700 crore) will be met by appropriate mix of equity infusion, debt restructuring, sale and leaseback/refinancing of aircraft, among other things.

“Conversion of lenders’ debt into 11.4 crore shares of `10 each by allotment of such number of equity shares to the lenders that would result in the lenders becoming the largest shareholders in the company. Such allotment of 11.4 crore shares will be made at an aggregate consideration of `1 since under the RBI circular, lenders can convert debt into equity at `1 when the book value per share of a company is negative,” Jet Airways had said in a statement on February 14.

As is known, Jet defaulted on a loan repayment to the consortium of lenders on December 31, 2018. It also owes substantial payment to its vendors. As per the RBI’s February 12, 2018 circular, the company needs to come out with a resolution plan within 180 days to avoid going into insolvency.

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