Jet Airways resolution: Shares to remain listed, new owners propose FPO

However, a fixed sum of Rs 10,000 will be paid to the existing shareholders of the airline other than public shareholders.

By Ankur Mishra

The new owners of Jet Airways have proposed to keep the airline listed and plans to bring a follow-on-public offer (FPO) for restoring minimum public shareholding, as per resolution plan mentioned in the written order of NCLT.

The Murari Lal Jalan and Kalrock Capital consortium has proposed to issue 1 equity share for every 100 shares held by existing public shareholders of Jet Airways. Further, the equity shares held by the former promoters, Etihad, financial institutions and all the preference shares held by the former promoters and Etihad shall stand fully extinguished. However, a fixed sum of Rs 10,000 will be paid to the existing shareholders of the airline other than public shareholders.

The consortium will invest a maximum sum of Rs 600 crore in the equity of the airline which will give them 89.79% stake in the company. Accordingly, the public shareholding will be reduced to about 0.21% after that. Similarly, financial creditors will hold 9.5% and workmen and employees will hold 0.5% stake as per resolution plan.

However, the new owners will ensure that the public shareholding is restored to at least of 10% within a maximum period of 18 months and subsequently to 25% within a maximum period of three years. In December 2020, Sebi had amended norms for listed companies going through insolvency process and prescribed 12 months to achieve public shareholding of 10% and 36 months to achieve public shareholding of 25%.

“The successful resolution applicant proposes to restore the public shareholding in the corporate debtor through the issuance of fresh shares of the corporate debtor to the public, at market price, by way of a FPO, which process shall be carried out in compliance with applicable laws,” NCLT order said.

The financial creditors of Jet Airways will get Rs 385 crore against the admitted claim of Rs 7,807 crore, implying a 95% haircut for the lenders. The lead creditor, State Bank of India, has the highest admitted claims of Rs 1,636 crore, followed by Rs 1,084 crore from Yes Bank, Rs 754 crore from Punjab National Bank and Rs 594 crore from IDBI Bank, among others.

The National Company Law Tribunal (NCLT) on June 22 had approved resolution plan of Murari Lal Jalan-Kalrock Capital consortium with a few riders. The consortium will have to get approval of slots for Jet Airways from the Directorate General of Civil Aviation (DGCA) within 90 days.

In its order, the tribunal has pointed out that Jet Airways ceased operations prior to initiation of insolvency. The legal protection under insolvency law that disallows cancellation of existing government licensees, concessions will not be applicable to it.

The shares of Jet Airways remained locked in the lower circuit on Thursday to close 5% down at Rs 126.45 per share on BSE.

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