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20 Jun 2019, Edition - 1437, Thursday

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Business

Why SBI is going out of its way to save Jet Airways

businesstoday.in

On February 14, the troubled airline Jet Airways announced a bank-led provisional resolution plan (BLPRP) that detailed the plans of Jet’s lenders, led by SBI, to take over the airline, and appoint a new board to revive the struggling carrier.

Is the government-controlled SBI (State Bank of India) bending the RBI rules to save the troubled Jet Airways? The discrepancy in the RBI’s circular last February and Jet Airways’ debt resolution note seems to suggest so.

On February 14, the troubled airline Jet Airways announced a bank-led provisional resolution plan (BLPRP) that detailed the plans of Jet’s lenders, led by SBI, to take over the airline, and appoint a new board to revive the struggling carrier.

“Conversion of lenders’ debt into 11,40,00,000 shares of Rs 10 each by allotment of such number of equity shares to the lenders that would result in the lenders becoming the largest shareholders in the company. Such allotment of 11,40,00,000 shares will be made at an aggregate consideration of Re 1 since under the RBI circular, lenders can convert debt into equity at Re 1 when the book value per share of a company is negative,” said the Jet note. As on March 20, Jet’s book value was (negative) Rs 919.94 crore.

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