The ailing Jet Airways founder Naresh Goyal told lenders seeking to rescue the airlines that he will take up rest of his shares to them on condition of releasing the promised interim loan funding of Rs 1,500 without delay.
Although Goyal owns 51% in Jet Airways, he has pledged 31.2% with lenders.
The response of the lenders to the proposal is not known. Meanwhile, Etihad Airways, Jet’s second-largest shareholder, is planning a board meeting to discuss the revival plan proposed by the lenders led by State Bank of India (SBI) before taking a call on whether to invest further in Jet Airways, said one of the persons cited above. The airline had earlier refused to be part of the plan and wanted to exit the company.
But negotiations with the Abu Dhabi carrier resumed after Goyal resigned as chairman and director and agreed to relinquish control. Etihad has stuck to the demand that it should be exempted from the takeover norm that requires investors to make an open offer for a further 20% stake if they exceed a 25% threshold. Etihad has a 24% stake in Jet.
The pledging of Goyal’s remaining shares are critical to the plan by the banks to sell a controlling stake in the airline to a new investor. Interim funds are equally critical for Jet, which has grounded most of its planes, defaulted on vendor payments and delayed salaries. The Jet management has estimated it won’t survive beyond this month without an urgent release of the promised loans.
Jet Airways and SBI didn’t respond to queries. Etihad said it does not comment on “rumour or speculation”.
Goyal sought interim funds “via a signed letter on the advice of the airline’s chief financial officer Amit Agarwal”, said one of the people cited above. Additionally, he met the airline’s lenders along with two Jet directors Ashok Chawla and Nasim Zaidi, former aviation secretary and exdirector general of civil aviation (DGCA), respectively.
Expressions of interest (EoIs) by potential investors were invited on Monday. The initial bid document offers between 31.2% and 75% of shares to the new owner of Jet. The deadline for submitting EoIs is Wednesday. One of the people cited above said none had been submitted on Monday or Tuesday.
The first step in Jet’s resolution plan, approved by its board, would be the issuance of 114 million shares to banks under a debt-equity swap at Re 1, putting the lenders in control of more than 50% of the airline. The second step would be for the lenders to seek a new buyer or buyers. The swap plan, however, came under a cloud after a Supreme Court order last week quashed debt restructuring rules introduced by RBI in February 2018. After this development, the banks can only sell shares that are pledged to them. The bid document says the sale is being conducted by the lenders as Jet could not honour its debt obligations.
Jet’s lenders have been holding talks with Etihad, trying to persuade it to invest further. They have also reached out to private equity investor TPG and government-backed National Investment and Infrastructure Fund (NIIF). According to the bid document, government-promoted funds or quasisovereign wealth funds need not submit an EoI and can directly bid for the airline.
Jet CEO Vinay Dube told employees the airline is working to secure interim funding to get more planes flying. It also supports the resolution plan by lenders, he said in a letter, adding, “There is hope that we will recapitalise the airline.”
Meanwhile, a lawyer representing Jet pilots on Tuesday wrote to Dube, saying they would be forced to “resort to all constitutional and legal methods” if the outstanding salaries weren’t cleared by April 14 and future salaries by the 1st of each month.