While the Jet Airways board has announced a restructuring plan that will see lenders taking a controlling stake in the company, the key question being asked by investors is whether Naresh Goyal will continue to be the promoter of the debt-laden airline.
Jet Airways’ management did not directly respond to this question at an analyst call on Friday. “The promoter will be the Chairman of the board,” said Vinay Dube, CEO of Jet Airways.
“Jet Airways will continue with the structure of a professionally run management reporting to the board of directors.”
According to industry sources, since banks do not want to stay in control of Jet in the long term, they may have agreed to let Goyal stay as the promoter even though the latter’s stake in the company will come down to 20-25 per cent from the current 51 per cent.
Rescue plan
Under the plan announced on Thursday, lenders led by SBI will convert debt into 11.4 crore shares for just ₹1. This will result in the lenders becoming the largest shareholders in the company with an about 50 per cent stake.
Though the company did not disclose the details of the restructuring plan, it said in a statement the plan proposes restructuring under the provisions of the RBI in order to meet a funding gap of nearly ₹8,500 crore, which will be met by a mix of equity infusion, debt restructuring, and sale and lease back of aircraft.
Analysts tracking the aviation sector said the recent proceedings in the insolvency courts under the IBC could give some direction on the issue of changing promoters of a defaulting company.
The IBC example
“All the companies which are going through the insolvency process are seeing a change in promoter. Even the courts have ruled that promoters who have defaulted should not be put in charge of the company after debt restructuring,” said an analyst on conditions of anonymity.
Since Jet Airways is not going through the insolvency process, Goyal can technically stay as promoter until the banks find a new owner for the company.
Going by Goyal’s earlier offer, he is keen to stay on as the promoter of the company which he built from scratch. He had offered to put in ₹700 crore in the company as long as he was allowed to retain the promoter tag.
Meanwhile, media reports suggested that the company may raise ₹5,000-6,000 crore through a rights issue.