Jet Airways Chairman Naresh Goyal steps down; opens space to bring new investor

Published on : Tuesday, March 26, 2019

Naresh Goyal, the Promoter and Chairman of Jet Airways along with his wife, Anita Goyal has stepped down from their positions in the board.

 

 

Naresh Goyal will also cease to be the Chairman of the Company. Along with the Goyals, another board member nominee on behalf of Etihad Airways has also resigned.

 

 

A board meeting was held on Monday where it was decided that equity shares of Lenders’ debt worth Rs 11.4 crore will be converted at Rupee one each. The bidding process will be initiated by lenders for sale or issue of shares to new investors by the June quarter.  In addition, an interim funding of Rs 1500 crore will be pumped in by lenders.

 

 

Goyal’s stake will be cut to 25.5 per cent from the current 51 per cent, while Etihad Airways’ stake in the debt-laden carrier will also be halved to 12 per cent to make room for the banks to take a controlling stake of 50.5 per cent in the airline.

 

 

Saddled with debt of more than $1 billion, Jet owes money to banks, suppliers, pilots and lessors – several of whom have started terminating leases with the carrier. The government has asked state-run banks, led by SBI, to rescue Jet without pushing it into bankruptcy, two people within the Indian government have told to Reuters that Prime Minister Narendra Modi seeks to avert thousands of job losses weeks before a general election.

 

 

The reports of Goyal’s departure led to a rally in Jet’s shares of more than 12 per cent. Goyal’s exit paves the way for the company’s lenders led by State Bank of India to bring in a new investor. SBI Chairman Rajnish Kumar told that they will run the process to invite Expression of Interest. The last date for EoI will be April 9. One month’s time for conducting due diligence will be allowed. Since they have put in a lot of effort in putting together the resolution plan, all that the buyer needs to do is validation.

 

 

The board of directors of Jet Airways on Monday approved the lenders debt into equity by the issuance of 11.4 crore equity shares for ₹1. Market capitalisation of Jet Airways is around ₹2,900 crore. Banks’ are taking 50 per cent stake in the airline. So, the value of banks’ stake is around ₹1,500 crore. With this, the consortium of lenders will become the majority shareholders.

 

 

Kevin Knight, nominee director of Etihad Airways, has also resigned from the board. Instead two lender nominees will be inducted. The two nominees of the promoter group and one nominee of Etihad Airways will continue on the board.

 

 

As part of the resolution plan, the lenders will provide an immediate interim funding support of ₹1,500 crore to Jet Airways. This will be used to partly clear pending dues towards lessors, vendors, creditors and employees in a phased manner.

 

 

An Interim Management Committee has been constituted to oversee the overall financial and operational performance of the airline with the support of McKinsey & Co. The lenders will now begin the process of sale to new investors, which is expected to be completed in the June quarter The open bidding process could open up avenues for several strategic investors like IndiGo and SpiceJet to invest in the airline along with existing prospects like Etihad and Tatas.

 

 

 

Meanwhile, Ajay Singh, Chairman and Managing Director of SpiceJet said “today is indeed a sad day for Indian aviation…this is also a wake-up call for Indian policy makers. We urgently need to address structural challenges that make India’s airlines uncompetitive to airlines around the world.”

 

 

 

As Jet Airways battles acute financial woes, a senior government official Monday said a “good outcome” from the negotiations between the creditors and the company would be better than moving for proceedings under the insolvency law.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

@BusinessLine

Related Posts

Tags: , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

*

code

arrow2Follow TTW
 
facebook-logo  twitter-logo  LinkedIn_logo  rss_logo 
ttw_blogger_logo  ttw_blogger_logo

ADVERTISEMENT

  • 20 satte 2020
  • 20 uzakrota Istanbul 2019
  • 21 ameistanbul 2020
  • 22 BLTM Banner 2020
  • 22 iitm 2020
  • 23 Emitt 2020
  • 24 OTM-Banner 2020
  • 25 aviation-festival-asia 2020
  • 25 fitur 2020
  • 30 PATA

TRAVEL INDUSTRY EVENTS

    1. HOTELIER SUMMIT SOUTHEAST ASIA

      Nov 13, 2019 - Jan 14, 2020
    2. DRT SHOW HONG KONG

      December 13 - December 15
    3. REISELIV MESSEN OSLO 2020

      Jan 4, 2020 - Jan 5, 2020
    4. LAIKI TECNHI 2020

      Jan 8, 2020 - Jan 12, 2020
    5. SATTE 2020

      Jan 8, 2020 - Jan 10, 2020
Get our toolbar!
Review www.travelandtourworld.com on alexa.com