The Jet Airways stock closed higher today after the ailing airline's chairman Naresh Goyal told the State Bank of India (SBI) that he was ready to invest up to Rs 700 crore in the airline on the condition that his stake does not fall below 25 per cent.
The development comes a day after Etihad Airways offered to invest in the debt-laden carrier at a discount. The discount was as much as 49% to its closing price of Rs 293.70 on NSE on Tuesday. Etihad Group CEO Tony Douglas had written a letter to SBI Chairman Rajnish Kumar on restructuring of the Indian airline.
Etihad reportedly put forward strict conditions, including that Goyal should give up control, for infusing funds into the crisis-hit carrier.As per the shareholding pattern available on the BSE, promoter Naresh Goyal owns a 51 per cent stake in Jet Airways and Etihad Airways owns 24 percent. Goyal owns 5,79,33,665 shares, amounting to 51 per cent stake in the company.
The Jet Airways stock which had been sulking for the major part of the day on tough conditions imposed by Etihad for fund infusion was helped by Goyal's intent to invest Rs 700 crore in the airline.
The stock opened at a loss of 2.95% at 263 level compared to the previous close of 271 on the BSE.
The scrip declined 5.31 per cent to Rs 256.60 intra day on BSE. On NSE, shares of the company slumped 4.93 per cent to Rs 256.40.
The stock gained momentum at 13:12 pm after Goyal's statement and went to touch an intra day high of 295 level, up 9.15%. The stock closed 5.09% higher at 284.80 on the BSE today.
The stock has lost 65.33% during the last one year.
The stock closed 7.95% or 23.40 points lower at 271 level on the BSE today. The stock is trading above its 50-day and 200-day moving average of 267 and 268 levels respectively.
In a letter to SBI Chairman Rajnish Kumar, Goyal said he was writing 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".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 which was seen by PTI.
"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," as per the letter.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.
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, which is facing acute financial problems.
Earlier, reports said Etihad Airways may hike its stake in the company to 49 per cent through an open offer but yesterday Etihad Airways sought a written exemption from the open offer form Sebi.Etihad said it would invest in Jet Airways only at Rs 150 per share and not pledge more shares to raise money for the carrier, according to a report by CNBC TV 18. The airline had Rs 8,052 crore of debt on its books as on September 30.
The huge debt has led to a backlog of over two months in salary payments to its senior staff, including pilots and engineers. The full-service carrier, which has been grappling with financial woes for some time now, has been making delayed salary payments to its staff.
The airline continued its poor financial earnings show when it announced its Q2 earnings on November 13, 2018. The airline reported its third consecutive quarterly losses for the quarter ending September, with a consolidated net loss of Rs 1,261 crore, roiled by higher fuel cost that soared 59 percent, and a steep rupee fall that led to a seven-fold spike in forex losses.
The Naresh Goyal-run airline, which is part-owned by Gulf carrier Etihad Airways, had posted a net profit of Rs 71 crore in the same period last fiscal.
On November 19, 2018, the stock saw some profit booking after its rose 41.13% in the last four sessions amid reports that Tata Group was likely to acquire the struggling carrier.
On January 2 this year, the shares of Jet Airways which owes over Rs 8,000 crore to SBI-led consortium tumbled nearly 7 per cent after the crisis-hit firm defaulted on repayment of loans to a consortium of Indian banks.
Edited by Aseem Thapliyal