The unfolding saga of debt-laden Jet Airways is turning into a corporate battle, even as the airline's lenders are considering writing off about 25 per cent of its debt, according to media reports.
After Gulf-based carrier Etihad laid down the conditionthat Goyal should not hold more than 22 per cent stake in the restructured Jet, he has promised Rs 700 crore cash infusion on condition that he controls at least 25 per cent of the equity. Goyal currently controls 51 per cent stake against Etihad's 24 per cent.
Jet founder Goyal, in a letter dated January 16, told State Bank of India (SBI) chairman Rajnish Kumar that apart from the cash offer he was willing to pledge all his shares in the company provided he could have at least 25 per cent stake in the airline.
Goyal insists that in case his stake falls below 25 per cent, he would not be able to bring in fresh funds until the market watchdog Securities and Exchange Board of India (Sebi) grants him exemption from takeover norms. He also wants the money that Jet owes the Goyal Group to be considered as equity infusion, according to a report.
Etihad CEO Tony Douglas said in a letter to State Bank of India (SBI) chairman Rajnish Kumar the foreign partner's fund infusion into Jetwill be contingent on limiting Goyal's role as chairman emeritus and denying him a seat on the Jet board, though he may be allowed to nominate two directors. While the decision on the chief executive officer and the chief financial officer should be named in the resolution plan while the final decision will be left to the reconstituted board. The United Arab Emirates (UAE) national carrier also wants a role in defining the selection criteria.
Goyal's stance is that the amounts Jet owes to the promoter group should be treated on par with what is due to the other creditors. The dues thus converted into equity should be considered as cash, according to Goyal's letter.
Douglas' letter stated it was already agreed that there should be no conversion of debt held by non-bank creditors (including Goyal and his affiliates) into equity.
The consortium of lender led by the SBI is planning to convert a portion of the Rs 8,000-crore loan into equity, according to a Business Standard report. This would amount to about 40 per cent equity in the company. Etihad's stake could also rise but it has sought an exemption from the Sebi takeover code.
Reports of Douglas' demand for a 47 per cent discounted stock price at about Rs 150 had put pressure on Jet shares, despite clarification from the company.
