A deep dive into the resolution plan of Jet Airways
The new management of Jet Airways – the consortium of Kalrock Capital and UAE-based Murari Lal Jalan – will infuse Rs 1,375 crore over the next 2-3 years, as per their resolution plan approved by the National Company law Tribunal (NCLT).
In the first 6 months, the management plans to infuse Rs 350 crore as equity, which would go towards CIRP costs, contingency fund, payment to financial creditors, operational creditors, other creditors, and other stakeholders, working capital for business and Miscellaneous admin expenses.
In the next six months, the management will another Rs 250 crore in the form of equity, and this amount will go towards working capital for business, acquiring Etihad’s stake in Jet Privilege Private Ltd; making payments to creditors if the successful resolution applicant is inclined in advancing any payment timelines.
The rest of the Rs 775 crore would be infused through debts in from the second year onwards. Most of this will go towards working capital requirements and remaining payment to financial creditors.
Of the Rs 1,375 crore, Rs 475 crores will be used for payment to stakeholders from successful resolution applicant’s cash infusion, and Rs 900 crores will be infused by new management for capital expenditure (CAPEX) and working capital requirements for smooth functioning of the corporate debtor.
Of the Rs 7,807 crore total admitted claims of the financial creditors, the resolution plan provides for Rs 380 crore for financial creditors, Rs 10 crore for operational creditors and Rs 52 crore for employees.
Each operational creditor would be given Rs 15,000 as per the resolution plan.
Another Rs 25 crore (of the Rs 500 crore resolution plan), will go towards acquiring 50% in Jet Privilege Private Ltd (JJPL) from Etihad. Jet Privilege Private Limited (JPPL), part of the Etihad Aviation Group, is an independent, loyalty and rewards Management Company formed in 2014.
Another Rs 25 crore has been set aside as CIRP cost.
The dissenting financial creditor would be paid the liquidation value due to them in priority to other financial creditors in terms of Section 30(2) of the Code read with Regulation 38(1)(b) of the Regulations, out of the amounts reserved for the Financial Creditors in terms of this Resolution Plan.
Reconstitution of shareholding
As per the resolution plan, the equity shares held by the ex-promoters, Etihad and Financial Institution equivalent to 8,51,98,037 shares of Rs 10 each collectively representing 75% shareholding in Jet Airways, and all of the preference shares held by the ex-promoters and Etihad will stand fully extinguished within 170 days from the effective date.
The share capital held public to the tune of Rs 28.39 crore would be reduced to Rs 2.84 crore, or 0.21% of the reconstituted share capital.
The resolution applicant will acquire 89.79% in Jet Airways for Rs 600 crore fund infusion. The financial creditors will get 9.5% stake and employees will get 0.5% as part of conversion of debt/dues into equity.
The management will have to ensure that the public shareholding in Jet Airways is restored to at least of 10% within a maximum period of 18 months and subsequently to 25% within a maximum period of 3 years.
Also See: Successful resolution pans of well-known CIRP cases
