Creditors weighing restructuring plan of troubled Jet Airways

Creditors weighing restructuring plan of troubled Jet Airways
Jet Airways controls more than a sixth of a India's booming aviation market.
SHARE

Bengaluru/Mumbai: Jet Airways Ltd's lenders are considering a plan to resolve its debt issues, top creditor State Bank of India (SBI) said on Thursday, amid media reports two main shareholders have yet to resolve their differences.

"Lenders are considering a restructuring plan under the RBI (Reserve Bank of India) framework for the resolution of stressed assets that would ensure long-term viability of the company," SBI said.

Jet on Wednesday said a plan involving a cash injection by stakeholders and board changes was under discussion.

Jet Chairman Naresh Goyal said in a letter to SBI's chairman that he is willing to invest 7 billion rupees ($98.48 million) in the airline and pledge all his shares but wants to retain a 25 percent stake in the carrier he founded, TV channels reported on Thursday.

However, Etihad Airways, which holds a 24 percent stake, wants Goyal to step down from the board and cut his stake to 22 percent from 51 percent, according to reports.

Etihad told the SBI in a separate letter it was willing to buy more shares in Jet and immediately pump $35 million into the troubled carrier if Goyal does so.

Jet said in a statement on Thursday that Goyal had communicated his position to SBI and that it was under consideration. The airline did not elaborate further.

Goyal did not respond to a Reuters request for immediate comment.

Jet controls more than a sixth of a India's booming aviation market. Yet high fuel taxes, a weak rupee and price competition have squeezed profitability, leaving Jet with $1.13 billion in net debt as at the end of September and defaulting on payments.

The airline owes money to banks, employees, vendors and lessors - some of which are exploring taking back aircraft, sources have told Reuters.

SBI's executive committee was scheduled to meet on Thursday to discuss the plan, news channel BTVI reported, citing unidentified sources. It said the restructuring of loans extended by SBI would be subject to Jet finding a strategic partner.

Any resolution plan would require clearance by the central bank, market regulator and the civil aviation ministry, as well as approval from the airline's board and all of its lenders, SBI said.

Ownership and control of Jet must remain in domestic hands, India's civil aviation secretary, R N Choubey, told reporters on Wednesday.

Jet's shares gained 5.8 percent on Thursday after falling 8 percent a day earlier.

Read more Business News

MORE IN BUSINESS NEWS
SHOW MORE
The comments posted here/below/in the given space are not on behalf of Onmanorama. The person posting the comment will be in sole ownership of its responsibility. According to the central government's IT rules, obscene or offensive statement made against a person, religion, community or nation is a punishable offense, and legal action would be taken against people who indulge in such activities.