Jet airways offloads Goyal

New Delhi: Beleaguered airline Jet Airways' last board meeting on Monday with its founder-promoter Naresh Goyal was a major turning point with Goyal and his wife Anita Goyal tendering resignations from the board of the cash-strapped airline.

With their resignations from the board, lenders led by SBI have taken over the management. The Jet board also accepted the lenders' resolution.

The exit will see Jet Airways' Chairman Naresh Goyal reduce his stake to 25.5 per cent in the cash-strapped Indian carrier, the company said as it closes in on a rescue deal led by state-run banks.

"No sacrifice is too big for me to safeguard the interest of Jet Airways and the families of the 22,000 employees.

For the sake of my family of 22,000 employees and their respective families, I have today taken the step of stepping down from the board of Jet Airways," he said in a statement issued by the airline later. He became Chairman of the company in April 1992.

Saddled with debt of more than Rs 8,000 crore, Jet owes money to banks, suppliers, pilots and lessors, several of whom have started terminating leases with the carrier.

In its statement, Jet said the banks will initiate a bidding process to sell their stake in the airline to a new investor and that the process is expected to be completed by June-end.

Among others, the board of directors of the company also cleared constitution of an interim management committee at the instructions of the lenders to manage and monitor the daily operations and cash flow of the company.

Several names are in circulation, including those of past chairpersons of SBI, including A.K. Purwar, Arundhati Bhttacharya, Air India's current chairman Ashwini Lohani, to manage the airline's day-to-day operations.

The changes at the board immediately ensured funding of Rs 1,500 crore for working capital.

Sources said during the meeting of the board, the members, including the lenders, accepted that it may take 4-6 months to find a new buyer or investor. Very soon with the vacant two positions, lenders would nominate two directors to the board.

The company said "its board of directors, at its meeting held on Monday, considered the resolution plan being formulated by a consortium of domestic lenders led by the State Bank of India. As per the resolution plan, two nominees of promoter, Naresh Goyal and Anita Goyal, and one nominee of Etihad Airways PJSC may step down from the board," it said.

Kevin Knight was the Etihad nominee. Additionally, Naresh Goyal also ceased to be the chairman of the company, the company added.

The board has given approval for issuance of 11.4 crore equity shares of the company to the lenders upon conversion of Rs 1 of the outstanding debt.

The company also said that its board approved creation of appropriate security over the company's assets for securing the existing facilities extended by the lenders and the proposed immediate funding support of up to Rs 1,500 crore by way of issue of appropriate debt instrument.

Meanwhile, embattled Jet Airways promoter Naresh Goyal, who was forced to cut his stake in the cash-strapped airline, will be eligible to bid for takeover of one of the oldest private carrier when the lenders auction it next month, SBI chairman Rajnish Kumar said.

State Bank of India, which is the leader of the group of lenders, will next month invite Expression of Interest from buyers willing to take over the airline and will finalise the investor by May end, Kumar said.

Bidding process to be initiated by lenders for sale to new investor(s) is expected to be completed in June quarter as per the resolution plan. "June is too late. My expectation is May 31. Market is open for everyone whosoever wants to come in.

There will be expression of interest which will be given by April 9 and binding bids by April 30. It could be financial investor, it could be airline including Naresh Goyal himself or Etihad. Nobody is barred from bidding or taking over the airline as per the rule," Kumar said.

Asked about board nominee from lenders' side, Kumar without revealing names said, it would-be top-quality professional who would see through the process of sale for which strict timelines are there.

Jet Airways has a debt of over Rs 8,200 crore and needs to make repayments of up to Rs 1,700 crore by the end of March. It has already defaulted on an ECB payment earlier this week but is servicing its domestic debt.

Finance Minister Arun Jaitley said he was happy with the lenders' decision regarding Jet Airways as the public sector banks have kept legitimate self-interest and public-interest in mind.

About the developments at Jet Airways, Jaitley said this was a decision that creditors have taken and that the public sector banks have kept a legitimate self-interest and public-interest in mind.

"India needs more aircraft and airlines otherwise air fares will rise. Banks have kept self interest in mind by trying to keep it as a going entity so that they can recover their dues. I am happy with this decision," he said.