New Delhi: In an effort to heal its financial woes, Jet Airways Ltd has said it will seek a green light from shareholders to turn a part or all of its existing debt into equity next month. At a specially convened meeting on February 21, shareholders will cast a vote on its proposal. Jet Airways will also request shareholders to permit its lenders to nominate directors to its board, it said.
From Rs 200 crore, Jet said it plans to increase its share capital to Rs 2,200 crore by generating an additional 50 crore shares and 150 crore preference shares, the carrier said in a communication to the stock exchanges on Monday.
As of September 30, the airline has been saddled with debts of around Rs 8,052 crore as it continues its efforts to finalise a deal that suits both its lenders and minority partner Etihad Airways.
Referring to the proposals, Girish Vanvari, founder of Transaction Square, a corporate consultancy firm, said: "This is a precursor to a deal."
The resolutions proposed also comprise an authorisation to allow the debt-laden carrier's board to discuss and "issue and allot" shares and convertible instruments against conversion of loans into shares, convertible instruments and other securities.
Jet's official announcement to stock exchanges means that a deal with Etihad is on the cards, Vanvari added. Even other officials have the same opinion. "You need an airline to run another airline," an airline official said on conditions of anonymity.