Key stakeholders of Jet Airways including Etihad Airways, Naresh Goyal and the lenders seem to have cobbled up a resolution plan which could result in an interim fresh funding of ₹ 4,000 crore into the beleaguered airline in addition to fresh equity infusion. 

This includes ₹ 750 crore interim financing by Etihad and another ₹ 750 crore by the lenders, according to sources close to the development. Shares worth 34.9 per cent stake in Jet Privilege Private Limited — the loyalty rewards programme of Jet Airways — is likely be pledged equally to Etihad and the lenders to secure the interim funding. Ministry of Civil Aviation has already approved for the pledging of Jet Airways’ shares in Jet Privilege.

Change in shareholding

Under the proposed agreement, overall shareholding of Jet Airways will change, with the promoter group ownership coming down to 17 per cent compared to 51 per cent. Jet Airways currently owes ₹ 450 crore to Naresh Goyal, which will be converted to equity. In addition, the promoter group has infused ₹ 250 crore. Goyal will be made Chairman Emeritus with no say in the day-to-day running of the airline.

Goyal will get to nominate two directors on the board of the company but has to agree on a non-compete clause for a three-year period. The promoter stake has been capped at 22 per cent. However, Goyal in a letter to Etihad CEO has asked for a relaxation on this clause by dropping the ‘perpetuity’ clause on the ownership cap. 

BusinessLine  had earlier reported that Naresh Goyal was bidding really hard to get his son, Nivaan Goyal the position of the executive director. But junior Goyal will be offered an executive position subject to evaluation and recommendation by the professional third party executive assessment agency.

Fresh equity

Etihad is expected to infuse equity between ₹ 1,600 crore and ₹ 1,900 crore to retain 24.9 per cent stake in Jet Airways. Etihad will get two board seats. Lenders will convert debt into equity and infuse fresh equity of ₹Rs 1,000 crore. This will give them 29.5 per cent stake in Jet. Anew investor will be roped to hold the balance stake in the company. 

Etihad’s board of directors met on Monday to discuss this resolution plan. It is not clear if they have approved this plan in the meeting. 

Goyal in a letter dated March 8, has asked Etihad to release the ₹ 750 crore interim funding in lieu of JPPL shares. “I now look forward to your support and cooperation in saving the airline by an urgent fund infusion of ₹ 750 crore by early next week, so that a matching contribution from banks is also disbursed, as per the resolution plan,” Goyal said in the letter adding that delay in releasing interim funding will could even result in the grounding of the airline. 

In a BSE filing, late evening on Monday, the debt-strapped airline informed that the part-repayment of the External Commercial Borrowing availed by the company, for working capital purposes, falling due on March 11, has been delayed owing to temporary liquidity constraints.

An Etihad Spokesperson said: “As a minority shareholder, Etihad continues to work constructively with the Jet Airways board, management team and other stakeholders.”

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