The effort of the lenders is to preserve the economic value of the enterprise in question, clarifies Rajnish Kumar, Chairman, SBI, the lead lender. During an interview with ETNow, he said If the new investor does not want X or Y as a shareholder, that will be its choice.
Edited excerpts:
We are still believing that Naresh Goyal is staying on as an investor. He has resigned from the board along with his wife Anita, but staying on with a 25 per cent stake. Can you confirm that for us and also what the new shareholding is going to be till new investor is found?
They would have informed the stock exchange, but all the existing investors' shareholding will be reduced by 50 per cent because lenders are acquiring or new shares are being issued — 11.40 crores new shares are being issued. Whatever is the percentage shareholding of anybody, just divide by 2, that is their revised shareholding.
Till Friday, when you met Finance Minister Arun Jaitley, one got a sense that two equity partners were just not seeing eye to eye. There was no consensus that could be reached. Now the lenders are in the driving position. You have a 50.5 per cent stake. Having said that, how will we reach a consensus?
About consensus, there is no issue. Everybody has been given the exit terms and they will sign those exit terms and it is for the new investor who comes in and what do they want. So, no roadblocks will be there from the existing shareholders.
Two new board members have to be inducted. If I could ask you this, what are the chances and we have been reporting that one of them could be SBI ex-chairman Janki Ballabh and then other one could also be an old SBI hand, a former managing director who has served on the Jet Airway board, Mr Vishwanathan. Are these the two likely candidates to be inducted into the Jet board?
We will make some recommendations to the Jet Airways board and then once the board accepts those recommendations, this information will be known.
But are these the two recommendations?
We have not made any recommendations as yet. We will consult all other Indian lenders. There will be every possibility. We are requesting some private banks if they would also be willing to nominate 1 per cent of their choice and the ultimate idea is that top quality professionals are on the board as lenders nominees so that they can oversee this process of sale for Jet Airways in the next two months.
Is there any plan in place to completely buy out Naresh Goyal, the founder and who used to be the principal promoter of Jet Airways? Is there any such plan?
It will be new investors' choice, what do they want to do. But the way is clear, the path is clear. The new investor comes in and lays down the terms. Whatever the terms, the lenders will evaluate and once that decision is taken, there will not be any roadblock from the existing shareholders.
Just at a realistic level, what are the odds of a new airline wanting to come into Jet when you already have Naresh Goyal with a 25 per cent stake, when you already have an Etihad with 12 per cent stake? Should I then imagine that perhaps there is going to be financial investor or if a new airline does want to come, it will press on the exit of these two shareholders?
You are asking me to repeat the same thing. What I am saying is new investor who comes in and says they do not want X or Y, this will be the choice of the new investor. This will not be the choice of the existing shareholders.
The Rs 1,500 crore is going into Jet for emergency funding. This is capital infusion or this is what the bankers are converting some of Goyals pledged shares into equity, debt into equity or is it fresh infusion?
This is like Indian lenders consortium which will held pro rata share in the 50.1 per cent equity which has been acquired for Re 1 and it has a mark to market upside and there will be identical participation in this instrument for raising the interim funding and to keep the airline as a going concern.
The choice between the lenders was that either we liquidate Jet Airways and lose everything or we see that it is sold as a going concern in the shortest possible time. After a lot of deliberations and considerations, the lenders decided that we will go for option two and in this, there is a risk, definitely a risk but not a very high risk if we look at the market capitalisation, the value of 50 per cent shares which lenders are getting and this fresh commitment of Rs 1,500 crore as priority secured interim funding.
SBI is the largest lender to Jet Airways. Jet has large financial and operational creditors. What would be your big message? What would be your big message to the employees of Jet Airways as well? The lenders are now the largest shareholder in this airline?
We are the largest shareholders. But the entire effort of the lenders and the decisions which they have taken are to preserve the economic value of the enterprise and this is the new paradigm after introduction of IBC process.
When you protect the economic value of the enterprise, you protect the interest of the stakeholders, employees are one of the most important stakeholders. Automatically if the enterprise survives, then there is no problem for the employees of the Jet Airways. This is a sincere effort. I am very hopeful that this effort will be successful, but in these things, you have to keep your fingers crossed.
We have seen Goyal in the past emerge from the brink of collapse that is when he had been able to convince Etihad to come on board with a 24 per cent stake back in 2013. Is Goyals journey with Jet Airways done and dusted or does he have the right to come back if he has got the money to back it up to increase his stake, take back control of the airline he founded nearly 25 years back?
The only criteria for selecting the new investor is they should not be ineligible under sector 29 A of IBC. That is number one. And any revised shareholding or investment will be governed by the Ministry of Civil Aviation guidelines in the matter and the third is Sebi guidelines which have to be complied with.
If you look at it, anyone who wishes to come in has to be compliant under IBC although it is not an NCLT driven process. They have to meet the ministry guidelines and they have to meet the Sebi rules. Once these three are done, the door is open to everyone, including Goyal.
But how will Goyal be eligible under Section 29 A because that bans a related party bidding?
Section 29 A is very clear. If the default is for more than one year, then the existing promoter becomes ineligible, in this case the default is not even three months old.
The press release also talks about closing this transaction in June. That is not very far away. Are you already talking to prospective investors, have you already got expression of interest, have there been some backdoor interests now that you have given such an ambitious timeline?
It is not an ambitious timeline, if you look at RBI February 12th circular, what says is that within six months, you should Read More – Source
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