Naresh Goyal offers to invest Rs 700 crore in Jet Airways subject to conditions

Jet Airways Chairman Naresh Goyal has offered to invest up to Rs 700 crore in the crisis-hit airline as well as pledge all his shares on the condition that his stake does not fall below 25 per cent, according to a letter.

Amid the full-service carrier grappling with financial woes, Goyal has written to SBI Chairman Rajnish Kumar with reference to the resolution plan under discussion and in view of Etihad's position, "despite the significant cash crunch and imminent grounding, which the airline is facing".

The letter also comes against the backdrop of strategic partner Etihad reportedly putting forward strict conditions, including that Goyal should give up control, for infusing funds into the airline.

Goyal said he is committed to an "infusion of funds into the company to the extent of Rs 700 crore" and pledging all his shares. This is subject to the condition that his shareholding post such infusion is at least 25 per cent, he said in the letter.

"Should this not be possible, then I would not be able to infuse any funds or pledge my shares, unless SEBI accords me an exemption permitting me to increase my reduced stake (if it is to be below 25 per cent) without triggering the Takeover Code," Goyal, who currently holds 51 per cent stake in the airline, said.

When shareholding of an entity in a listed company goes beyond a certain threshold, then the open offer requirement is triggered under SEBI's Takeover Code.

State Bank of India (SBI) is the lead lender of a consortium of Indian banks that has provided loans to the airline, and the stakeholders are considering a resolution for Jet Airways that is facing acute financial problems.

On December 31, 2018, the carrier defaulted on a loan repayment to the consortium.

"I am informed that under Indian law, amounts payable by the company to promoter group entities, should be treated at par with the other overdue creditors of the company and the same, upon conversion into equity is considered as cash," Goyal said in the letter.

He has also sought a fair and equitable resolution in the best interests of the airline and all its shareholders. "I respectfully submit that unless my shareholding goes below 10 per cent and/ or my group is not represented on the board, I would continue to be held out as a promoter, and be faced with the attendant exposures/ risks of being a promoter," Goyal said in the letter dated January 16.

Hence, it is only fair and equitable that "our shareholding be at least 25 per cent", Goyal said. Shares of the airline rose over 5 per cent to close at Rs 284.80 on the BSE. "As part of a continuous engagement with SBI, Naresh Goyal has communicated his position on the resolution plan to SBI, which is under consideration," the airline said in a filing to the BSE.

The filing was in response to a clarification sought from Jet Airways on Goyal's proposal to infuse Rs 700 crore into the airline subject to certain conditions. On Thursday, the SBI said lenders are considering a resolution plan for Jet Airways to ensure long-term viability of the debt-laden company.

The airline, on Wednesday, said discussions are "progressing well" with stakeholders on a comprehensive resolution plan that also contemplates equity infusion and consequent changes in its board of directors. The airline, on Wednesday, issued two statements on Wednesday, saying that it has been working on various cost cutting measures, debt reduction and funding options.

In the wake of financial problems, the airline has also deferred deliveries of Boeing 737 MAX planes.

The airline was to induct 11 Boeing 737 MAX planes by March this year and so far, it has taken delivery of only five such aircraft. The civil aviation ministry, on Wednesday, expressed hope that the airline, its strategic partner Etihad and lenders reach a "common plan" to deal with the situation.

Currently, Etihad holds 24 per cent stake in Jet Airways, which completed 25 years of operations in 2018.