Jet Airways EGM approves bailout plan, Naresh Goyal skips meet

The extraordinary general meeting called by crisis-ridden Jet Airways on Thursday saw the clearance of all the resolutions by the stakeholders, paving the way for conversion of lenders’ debt into equity as well as allowing directors nominated by the banks.

Promoter Naresh Goyal was not present in the meeting. The changes will allow the struggling carrier to meet its funding gap of nearly Rs 8,500 crore, which is required for smooth operations.

The carrier, in a regulatory filing on February 14, said it has approved the banks’ led provisional resolution plan (BLPRP) in order to meet a funding gap of nearly Rs 8,500 crore. The BLPRP will be met by an appropriate mix of equity infusion, debt restructuring, sale/ sale and lease back/ refinancing of aircraft, among other things.

As per the regulations under Reserve Bank of India (RBI), such allotment/ conversion of lenders’ debt to equity shares of the company can be made at an aggregate consideration of Re 1, when the book value per share of a company is negative. A company executive said, “The new equity structure will depend upon the equity infusion of each participants.”

At the EGM, Arvind Gupta, a minority stakeholder, said that their concerns regarding the clarity in running of the airline were not answered by the management in a satisfactory manner. “The tough questions were not answered,” said Gupta.

The airline recently had to ground a few of its aircraft due to non-payment of dues to the lessors. The financial troubles also forced the airline to halt deliveries of six Boeing 737 Max planes that were due by March.

Last month, Etihad Airways had offered to increase its stake in the airline up from 24%, but sought exemption from the market regulator Securities and Exchange Board of India on open offer and preference pricing. As per the regulatory mandate, a company has to make an open offer in case its stake holding in a listed company goes beyond a certain threshold. This led Jet Airways to respond that the discussions with various investors were still on as part of its turnaround plan.

Jet has been seeking funds from several investors, including Tata Sons, private equity investors and Etihad, in order to make a turnaround.