By an overwhelming majority, shareholders of the beleaguered Jet Airways approved a proposal at the extraordinary general meeting (EGM) on Thursday to convert a part of the company’s loans into shares.
The development assumes significance as the approval was required to go ahead with the consortium of lending banks-led Provisional Resolution Plan (BLPRP). As part of this, public sector lenders will become the largest equity owners of the airline, virtually making it a nationalised carrier.
According to the bank sources, overseas carrier Etihad, which currently holds 24 per cent stake in Jet Airways, abstained from voting on various proposals during the EGM earlier this week.
Punjab National Bank (PNB) said on Friday that the bankers’ consortium is finalising Jet Airways’ resolution plan for the long term as the lenders favour preserving the value of the airline.
“It is too premature to tell about the interim funding plan (of Rs 550 crore). Bankers are working on it and the SBI has already taken a lead,” PNB CEO and MD Sunil Mehta said at a bankers’ event.
“Let the entire plan be worked out first. Consortium is looking at the options, Jet’s resolution is a going concern and we would like to preserve (its) value,” he added.
Both the SBI and PNB are said to have agreed to provide Rs 500 crore interim funding for Jet Airways to continue operations, until a long term plan for restructuring the company is worked out for the carrier’s Rs 8,000-crore debt.
Under the BLPRP, lenders are to convert part of the airline’s debt into 11.4 crore shares at a consideration of Re 1 per share, as per RBI norms.
Subsequently, appropriate interim credit facilities would be sanctioned to the airline by the lenders.