Business

The airline is likely to infuse Rs 2,170 crore by subscribing to rights issue.New Delhi:In a fresh twist to ongoing Jet Airways bailout saga, lenders are now mulling over a fresh proposal.
With no resolution forthcoming last week and a deadlock persisting, Abu Dhabi-owned Etihad has submitted an alternate proposal for a stake hike in Jet Airways.
With Sebi (Securities and Exchange Board of India) formula for preferential allotment seen as unrealistic and unworkable, Etihad has proposed a rights issue worth $500 million.
Through this mechanism Eithad proposes to hike its stake to 49 per cent in Jet Airways.Etihad currently holds 24 per cent in Jet Airways and rights issue by Etihad is expected to be at around Rs 160 per share.
It is likely to infuse Rs 2,170 crore by subscribing to rights issue.
Other investors, lenders may also subscribe to rights issue.Jet Airways too reckons that rights issue is right instrumentality to negate need of open offer by Eithad, something that UAE airline was not willing to do.Equally, Etihad was planning rights issue to negate need of cash outflow to market.
Indian lenders are also expected to convert part debt to equity at Rs 1 per share.The conversion price was determined by an RBI (Reserve Bank of India) circular of February 12, 2018 and Naresh Goyal was offered position of Chairman Emeritus with no special rights.The carrier recently cancelled an order for 10 A320 Neo aircraft and let go several pilots to restructure its operations after a $3.5-billion loss during last two years.Etihad management has structured new proposal because it does not want a repetition of Air Berlin case.
Etihad had taken 29.2 per cent in Air Berlin just as it has 24 per cent in Jet Airways but situation was so precarious in German operation that airline went belly up.





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