Investors file Rs10b revival plan for Jet Airways
The plan submitted to the National Company Law Tribunal by the UAE-based investor Murair Lal Jalan and London’s asset management firm Kalrock Capital
A consortium of investors based in the UAE and London has submitted to India’s bankruptcy court a revival plan for Jet Airways pledging Rs10 billion capital infusion into the grounded airline over seven years.
The plan submitted to the National Company Law Tribunal by the UAE-based investor Murair Lal Jalan and London’s asset management firm Kalrock Capital pledges the infusion of Rs3.8 billion in phases in the first two years after the re-launch of the embattled airline and follow it up with an additional Rs5.8 billion over the next three to five years.
The plan was submitted by the consortium following its selection by Jet’s committee of creditors last month. As per the plan, lenders to the embattled carrier will get 9.5 per cent and 7.5 per cent stake respectively in the airline and its passenger miles company after subjecting to a 90 per cent haircut on their loan exposure. Financial creditors will also reportedly get 10 per cent free cash flows.
Upon approval of the resolution plan by NCLT, the consortium plans to commence operations with six aircraft domestically, then adding one aircraft each month, and plans to expand the fleet to 120 aircraft in five years.
Beset by severe cash crunch and mounting debts, Jet Airways, India’s largest private sector airline, was forced to stop operations in April 2019 and was admitted in NCLT, through a case filed by its lenders in June.
According to sources, creditors of the airline have claimed dues to the tune of 250 billion, of which the resolution professional has admitted total claims of Rs221.67 billion including Rs74.6 billion from financial creditors.
Since the airline is facing insolvency, public shareholders will not gain anything out of the deal. Before the insolvency case, Jet’s founder Naresh Goyal held 51 per cent stake while Etihad Airways held 24 per cent. As of end June 2020, Goyal as promoter held 25 per cent stake in Jet. Etihad as public shareholder held 24 per cent, while lenders hold 26 per cent, insurance companies, overseas investors and retail investors held the rest.
Jalan is an entrepreneur with investments in the UAE, India, Russia and Uzbekistan among others, while Kalrock Capital is a US-based financial advisory firm that mainly works in the real estate, venture capital and special situations space.
Jalan‘s flagship construction company MJ Developers is based in Dubai. He has interests in real estate and infrastructure, construction, FMCG, dairy, travel and tourism, and industrial works.
In India, his investments include a major share of Agio Paper Industries, stakes in Medanta super specialty hospitals and Patanjali India Distribution.
Jet Airways, which had 16,000 employees when it stopped operating in April 2019, now has 3,300 on its rolls. Currently, the airline has 12 aircraft on its books — nine wide-bodied planes and three narrow-bodied Boeing 737s.
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