State Bank of India (SBI) on Thursday said the lenders are considering a resolution plan for Jet Airways to ensure the long-term viability of the debt-laden company even as its chief Naresh Goyal offered to invest up to Rs 700 crore in the beleagured airline on the condition that his stake does not fall below 25 per cent.
The development comes after a day when the airline said discussions were “progressing well” with stakeholders on a comprehensive resolution plan that also contemplates equity infusion and consequent changes in its board of directors. There are serious concerns over financial health of Jet Airways, whose shares have also taken a beating at stock exchanges and has already defaulted on interest payment and principal payment to the lenders.
SBI in a communication said lenders are considering a restructuring plan under the RBI framework for resolution of stressed assets that would ensure the long-term viability of the company. Any such plan would be subject to approval of the boards of the lenders and subject to adherence and clearance, if required, from the RBI and/ or SEBI (takeover code, ICDR regulations ) and/or ministry of civil aviation and in compliance with all regulatory prescriptions.
SBI chairman Rajnish Kumar said on the sidelines of an event in Mumbai that Goyal had offered Rs 700 crore and wants to retain his stake at 25 per cent.
Goyal, in a letter to the SBI chairman, said he is writing on the resolution plan under discussion in view of Etihad's position, "despite the significant cash crunch and imminent grounding, which the airline is facing."
Goyal's offer comes against the backdrop of strategic partner Etihad reportedly putting forward strict conditions, which included Goyal giving up control, for infusing funds into the crisis-hit carrier.
According to banking sources, Etihad Airways, which bought 24 per cent in Jet Airways in 2013, is willing to inject between Rs 800-1,000 crore along with partners but wants Goyal off the board.
As per existing rules, a foreign airline can only hold up to 49 per cent in a domestic carrier.
Goyal said in the letter he is committed to an "infusion of funds into the company to the extent of Rs 700 crore" and pledging all his shares.
This is subject to the condition that his shareholding post such infusion is at least 25 per cent, he said in the letter.
"Should this not be possible, then I would not be able to infuse any funds or pledge my shares, unless Sebi accords me an exemption permitting me to increase my reduced stake (if it is to be below 25 per cent) without triggering the Takeover Code," said the letter.
When shareholding of an entity in a listed company goes beyond a certain threshold, the open offer requirement is triggered under Sebi's Takeover Code.
SBI is the lead lender of a consortium of Indian banks that has provided loans to the airline; and the stakeholders are considering a resolution for Jet Airways, which is facing acute financial problems. Goyal owns 51 per cent stake in the company.
The private carrier, in a statement on Wednesday, said it was weighing “various options on the debt-equity mix, proportion of equity infusion”. Lead lender State Bank of India, in a separate statement, added that all options are being discussed.