Jet Airways plans rights issue to raise Rs 4,000 crore

A day after Jet Airways made public its Bank Led Provisional Resolution Plan (BLPRP) to resuscitate the debt-ridden airline, sources familiar with the matter said the turnaround plan, which is a mix of equity infusion, debt restructuring and asset monetisation, will involve raising of over Rs 4,000 crore through a rights issue.

A senior banking official who is a lender to the airline told CNBC-TV18 that Jet Airways will raise over Rs 4,000 crore via a rights issue at a price of Rs 125-150 per share, once the requisite approval from the shareholders is in place.

Jet Airways, in a notice to the exchanges on Thursday, said that the BLPRP had identified a funding gap of Rs 8,500 crore, including proposed repayment of Rs 1,700 crore debt.

The debt-laden carrier will hold an extraordinary general meeting (EGM) on February 21 to seek shareholders nod to increase share capital Rs 200 crore to Rs 2,200 crore by the issuance of fresh Rs 50 crore equity shares and Rs 150 crore preference shares, and to convert whole or part of debt into equity, convertible instruments or other securities.

If the shareholders approve the plan, lenders will hold 52 percent, founder and chairman Naresh Goyal 25.5 percent and Etihad Airways 12 percent in Jet Airways.

The debt-laden carrier will also seek shareholders approval to modify Articles of Association of the company to allow lenders to nominate directors to the board.

The SBI-led consortium is looking to convert Rs 800-1000 crore of debt into investment instruments, and Jet will raise another Rs 1,700 crore though sale and lease back of its aircrafts, the sources said.

Once the rights issue is subscribed, the shareholding pattern will accordingly change as Etihad Airways and promoters are also expected to infuse fresh funds, they added.

Jet Airways is yet to respond to CNBC-TV18's query.

Shares of Jet Airways settled at Rs 232.55 apiece on the BSE, up 2.99 percent from its previous closing.