Etihad, lenders hold discussion to facilitate emergency funding for debt-laden Jet Airways

As the debt-laden Jet Airways continues to wait for funds to keep it afloat, middle-east carrier Etihad and banks have reportedly been discussing an emergency funding that the foreign carrier is expected to infuse into troubled India's airline, said media report.

The amount under consideration is about $35 million and Etihad, along with banks, plans to approach Securities and Exchange Board of India (SEBI) on the pricing for fresh equity — as laid down in Reserve Bank of India’s 12 February, 2018, circular and the regulator’s rules on issue of capital and disclosure requirements, said a report in The Economic Times.

“Etihad is working on a suitable structure to release the funds,” a source familiar with the development was quoted as saying by the daily.

Etihad, lenders hold discussion to facilitate emergency funding for debt-laden Jet Airways

Representational image. Reuters.

Naresh Goyal-promoted Jet Airways has been looking for funds for the past few months to keep it afloat amid rising debt and loan defaults besides non-payment of salary to its employees.

On 17 January, Goyal had said he was ready to invest up to Rs 700 crore in Jet Airways on the condition that his stake does not fall below 25 percent. Goyal’s offer came against the backdrop of strategic partner Etihad reportedly putting forward strict conditions, including that Goyal should give up control, for infusing funds into the crisis-hit carrier.

Early this month, State Bank of India (SBI) had said lenders were considering a resolution plan for Jet Airways to ensure the long-term viability of the debt-laden company, said a PTI report.

The SBI statement came a day after the crisis-hit 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 rising concerns over the financial health of Jet Airways, whose shares have taken a beating at stock exchanges.

It said the restructuring plan for the cash-strapped airline would need approval from boards of lenders.

In December 2018, Jet Airways was in discussions with the SBI for raising Rs 1,500 crore short-term loan to meet its working capital requirement and some payment obligations, a source said.

Etihad, which holds 24 percent stake in the Indian full-service carrier, is likely to provide a guarantee for the loan, he said.

Jet Airways, which has posted three consecutive quarterly losses of over Rs 1,000 crore each since March, already has as much as Rs 8,052 of debt on its books as on 30 September, 2018.

Early in December 2018, Jet Airways had sought soft financing of $350 million from Etihad, as it continued to hold discussions with the latter to offload additional stake in the carrier. The Middle-Eastern airline has, however, offered to finance as much as $200 million, the source said.

In November 2018, the government had virtually ruled out possibility of bailout package for cash-strapped Jet Airways, with Civil Aviation Minister Suresh Prabhu saying that a private airline's management had to make sure that the carrier functions properly.

With PTI inputs

 

 

 

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Updated Date: Jan 23, 2019 15:03:41 IST

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