Jet Airways Resolution Plan: Top details! Banks to buy Naresh Goyal, Etihad stake - Will this be airline's flight to recovery?

Jet Airways Resolution Plan: A new proposal has been put forth to revive Jet Airways' ailing health. This is an alternative resolution plan for the crisis-hit airline. According to the latest Jet Airways Resolution Plan, banks will also buy Naresh Goyal's and Etihad's stake. Also, they are expected to remain the biggest shareholder for some time. Moreover, the resolution plan proposes equity infusion of Rs 5,135 cr through Rights Issue at Rs 150/share. With these plans for resolution, bankers are pinning high hopes on the airline's revival. Moreover, they expect share prices to witness a surge. 

Jet Airways, one of the oldest private sector airlines, is sitting on a debt of Rs 8,200 crore and requires about Rs 4,500 crore for carrying on its operation smoothly. The acute financial crunch has forced the airline to ground aircraft, cancel flights and delay payment of salaries, including to pilots.

Here are key points of the new Jet Airways Resolution Plan:

Banks to buy Naresh Goyal and Etihad stake

-Bankers plan to take over the remaining stake of Naresh Goyal and Etihad via a trust, which will be under bankers 

- NG & EY to transfer 25.5% & 12.0% stake (post-conversion) respectively to an Independent Trust managed by Lender appointed Trustees

- Lenders to have a call option on the shares owned by the Trust at INR 150/share + 8% p.a. carry

- Trust will pass-on the proceeds received from sale of shares / exercise of the call option to Naresh Goyal & Etihad 

-Bankers propose to form a trust in which 25.5% shares of Jet held by Naresh Goyal and 12% of Etihad stake to be transferred to the trust 

-Lenders to have a call option on shares owned by the trust at over Rs 150/share

(2) Banks may remain biggest shareholder for some time 

-Banks plan to reduce their stake post rights issue, banks stake to come down below 30% (29.9%)

-One new investor to buy 19.9% and another to buy 24.9%, proposed trust to hold 14.9% and public holding at 10.7%

(3) Plans of Equity infusion of ‘5,135cr though Rights Issue at ‘150/sh

-New equity of Rs 5135 Crs to be infused in the Jet Airways via rights issue

How the Rs 5135 Cr rights issue to be subscribed 

- Investor 1 – Rs 1,700 Crs
-Investor 2 – Rs 2,100 Crs
- Lenders – Rs 850 Crs
-Public-Rs 485 Crs

(4) Bankers hope on revival and share price surge

- Indian Lenders to write-down their entire debt Rd 2,600 cr as of 21st Mar, 2019 in the Company

-Lenders still make a gain of Rs 2,636 crores ([email protected]%) assuming post-restructuring share price of Rs 300 of Jet Airways by March 2022

-No write-down by Lessors and other Creditors, while foreign lenders to take a haircut of Rs 1170 Cr

As the full-service carrier is struggling to stay afloat, its board on March 25 had approved a debt resolution plan that would see immediate fund infusion of Rs 1,500 crore and lenders taking control of the airline.