Business

Etihad Ready For Capital Infusion In Jet Airways; Will own 24% Stake 

NEWS WORLD INDIA | 0
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| March 12 , 2019 , 11:50 IST

Etihad Airways is the second-largest airline in the United Arab Emirates (after Emirates), will now going to own 24% its stake in jet airways with several conditions to be applied in the deal.

According to the memorandum of understanding (MoU) for the Jet-Etihad deal, 15% of the total share capital of Jet Airways loyalty programme, Jet Privilege Pvt. Ltd, pledged by Jet Airways to HSBC as security for a $150 million loan, will have to be made available to Jet Airways.

Etihad has also sought completion of the ₹4,000 crore interim financing as per terms agreed upon by Etihad, Jet Airways founder and chairman Naresh Goyal and a group of lenders led by the State Bank of India (SBI), before it makes a fresh investment in the Mumbai-based carrier.

“As part of the interim financing, lenders shall infuse ₹750 crore into the company. Etihad will procure funding for the company, either itself, or from an offshore or onshore lender, for an amount equivalent to lender’s financing, i.e., ₹750 crore, as soon as reasonably possible," the document said.

This will be subject to obtaining necessary approvals from Etihad Airways board of directors, regulatory clearances, and valid creation of a pledge for not less than 34.9% of the total issued equity share capital of Jet Privilege in favour of the lenders and Etihad "on a pari passu basis."

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Other conditions include issuances undertaken by Goyal and lenders to forego and renounce their pro-rata entitlement of participation in the rights issue, and for Goyal to limit his shareholding to 22%.

Besides, Goyal and Etihad will also need to agree to support the final resolution plan led by the lenders.