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Jet Airways seeks to raise $840 mln from share sale

Reuters

By Tanvi Mehta

BENGALURU, Feb 15 - Beleaguered Indian carrier Jet Airways is seeking an $840 million bailout from shareholders and a state-backed fund, Business Television India, after earlier approving a deal with its lenders to help plug a billion-dollar funding hole (graphic).

Jet will receive 15 billion rupees ($210 million) from the National Investment and Infrastructure Fund in return for a 20 percent stake and it may also seek to raise 45 billion rupees via a rights issue priced at 125-150 rupees per share, the news channel reported, citing unnamed sources.

Jet and the fund were not available for comment on Friday.

On Thursday, Jet said its board had approved a rescue plan in which a consortium led by State Bank of India would swap some of Jet's debt for 114 million shares, doubling the company's outstanding stock.

Jet shares were volatile, dropping as much as 4.8 percent when trading opened on Friday and rising up to 7.5 percent later. The stock was at 232 rupees by 1022 GMT.

Jet's short Thursday filing with the stock exchange lacked detail but investors read it as a sign of improvement.

"There is expectation that the company will survive," said Gagan Dixit, an analyst with Elara Capital.

"We believe that most bankers, lenders and lessors believe in the long-term sustainability of the company if they can gradually reduce their costs."

Flag carrier Air India is also struggling to stay afloat. Prime Minister Narendra Modi faces the tough decision of whether to bail it out as his government fights for a second term in general assembly polls come May.

Under Jet's rescue deal with lenders, it is unclear how much debt will be swapped for equity or how much money the lenders will infuse. Analysts, however, estimate lenders will hold a nearly 50 percent stake.

The dilution is likely to halve stakes of Chairman Naresh Goyal and second-largest shareholder Etihad Airways, who currently own 51 percent and 24 percent, respectively.

The plan needs to be approved by shareholders at a special meeting on Feb. 21 and by regulators.

"There is a prospect of dilution for minority shareholders," said Ansuman Deb, an analyst with ICICI Securities.

But "if banks are willing to forego some debt and take 50 percent stake, that will be a good thing", he added.

An Etihad spokeswoman declined to comment.

The Abu Dhabi carrier saved Jet the last time it was in trouble, pumping in $600 million for a stake in the airline, three take-off and landing slots at London Heathrow and a share in Jet's frequent flyer programme.

($1 = 71.3960 Indian rupees)

India's biggest airlines by market share png


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