Jet Airways set to finalise Rs4,000-cr financing deal: report

Beleaguered Jet Airways is reported to have reached an agreement with lenders and partner Etihad Airways on a debt resolution plan that would help infuse nearly Rs4,000 crore funds that would boost both equity and working capital of the loss-making carrier.

This includes fresh credit facilities of Rs2,050 crore from state-run Punjab National Bank (PNB) besides Rs750 crore interim financing by Etihad and another Rs750 crore by lenders.
Mumbai-based Jet Airways has raised foreign currency term loans amounting to Rs1,100 crore besides a non-fund based credit facility of Rs950 crore from PNB, according to loan documents, according to a report in the Mint.
Jet Airways said it will use the credit facility for working capital needs.
Jet Airways will pledge a total of 34.9 per cent of equity shares of Jet Privilege Private Limited — the loyalty rewards programme of Jet Airways - against interim financing of Rs750 crore each being extended by lenders and partner Etihad. 
Ministry of Civil Aviation has already approved for the pledging of Jet Airways’ shares in Jet Privilege.
Jet Airways is said to use the PNB loan for paying aircraft rental dues to lessors and salary dues to pilots and employees.
The financing agreement involves a major change in the shareholding pattern of Jet Airways. Promoter group ownership in Jet airways will come down to 17 per cent from 51 per cent. 
Etihad will infuse equity between Rs1,600 crore and Rs1,900 crore to retain 24.9 per cent stake in the airline. The Gulf carrier will also get two board seats. Lenders will convert debt into equity and infuse fresh equity of Rs1,000 crore. This will give them 29.5 per cent stake in Jet. 
A new investor will be roped in to hold the balance stake in the company. 
Jet Airways currently owes Rs450 crore to Naresh Goyal, which will be converted to equity. In addition, the promoter group has infused Rs250 crore. Goyal will be made Chairman Emeritus with no say in the day-to-day running of the airline.
Goyal will get to nominate two directors on the board of the company but has to agree on a non-compete clause for a three-year period. The promoter stake has been capped at 22 per cent. However, Goyal in a letter to Etihad CEO has asked for a relaxation on this clause by dropping the ‘perpetuity’ clause on the ownership cap. 
Naresh Goyal’s son, his nominee, will be offered an executive position subject to evaluation and recommendation by the professional third party executive assessment agency.
As of 31 December, Jet Airways had total outstanding dues, including loans and other payables, of Rs9,610.16 crore. The firm said it incurred a total loss of Rs3,208.23 crore in the nine months through December, with negative net worth of Rs10,370.24 crore.
“These conditions, together with four successive quarters of losses due to high fuel prices and fluctuating currency rates, coupled with tight liquidity conditions, pose a serious challenge to the company, indicating the existence of material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern," the auditors of Jet Airways said in a note accompanying the company’s financial statement.
Ratings agency Icra Ltd downgraded Jet Airways’ credit ratings in September, October, December 2018 and January 2019.