State Bank of India (SBI) is mulling moving the National Company Law Tribunal (NCLT) to recover its loans from Jet Airways as it feels the airline is running out of funds for operations, even as shareholders of the debt-laden carrier have approved a debt rejig plan, officials said.
Shareholders of Jet Airways have approved conversion of loan into shares and other proposals during the extraordinary general meeting (EGM) on Thursday.
A consortium of banks, led by the SBI, has extended loans to Jet Airways, which is looking to rejig debt and raise funds.
Officials associated with the lenders and key shareholders said SBI is considering moving the NCLT seeking insolvency proceedings against Jet Airways since it is running out of money for operations.
Lenders can initiate proceedings under the Insolvency and Bankruptcy Code (IBC) to recover dues from debt-laden entities. The process can commence only after approval from the NCLT.
Queries sent to SBI and Jet Airways regarding the bank considering insolvency proceedings against the airline remained unanswered.
Officials said that Gulf carrier Etihad, the strategic partner with a 24% stake in Jet Airways, abstained from voting on various proposals during the EGM held on February 21.
According to them, Etihad is waiting for clarity on the overall funding that SBI and National Investment and Infrastructure Fund (NIIF) would provide for Jet Airways in terms of equity.
The Gulf carrier has been pitching for SBI and the NIIF to own 51% and invest Rs 2,200 crore into the airline, they added.
On February 17, sources said Jet Airways was likely to invest Rs 3,000 crore after rejig of debt and investments by Etihad Airways as well as the NIIF.
Besides, the SBI is not in agreement with Etihad on the latter’s proposal regarding the right of first refusal (ROFR). Etihad has sought ROFR for itself after one year and also wants SBI to get a confirmation from that if ROFR is exercised, the mandatory open offer would not be triggered, officials said.
Source: Financial Express, February 25,2019