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Friday, 22 February, 2019, 15 : 00 PM [IST]

Jet Airways expects lenders’ nod for resolution plan next month

As per an Economic Times report, Jet Airways expects to start getting approvals from lenders for its resolution plan from next month, a senior executive said Thursday. The executive spoke on the sidelines of an extraordinary general meeting called to seek shareholder approval for enhancing the airline’s share capital, nominate board members from lenders and convert debt into equity, all of which are part of the resolution plan.

The airline’s board approved the plan on February 14 to meet a funding gap of INR 8,500 crore through a mix of equity infusion, debt restructuring and sale/sale and leaseback/refinancing of aircraft, among other steps.

The conversion of debt into equity will result in the lenders becoming the largest shareholders in Jet and the appointment of their nominees to the airline’s board of directors.

Such allotment/conversion will be made at an aggregate consideration of Rs 1, in accordance with a Reserve Bank of India circular, which says lenders can convert debt to equity at INR 1 when the book value per share of a company is negative. Jet’s authorised share capital is INR 200 crore, while its paid-up equity capital is INR 113 crore.
At the meeting on Thursday, it sought and received shareholder approval to raise the authorised share capital to INR 2,200 crore. This would constitute INR 680 crore of equity capital and INR 1,520 crore of preference share capital. (Source: Economic Times)
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