The cash-strapped Indian carrier Jet Airways today announced that its Chairman Naresh Goyal will step down from the board and reduce his stake, as it closes in on a rescue deal led by state-run banks.
The banks, led by State Bank of India (SBI), will convert their debt into equity and take a controlling stake in the airline for a token sum of 1 rupee ($0.0145), Jet said in a statement to the stock exchanges after its board met earlier in the day.
The banks will also give the airline a fresh loan of 15 billion rupees ($217.71 million) to meet payments and restore normal operations and the lenders will form an interim management committee to manage the airline.
Saddled with debt of more than $1 billion, Jet owes money to banks, suppliers, pilots and lessors – several of whom have started terminating leases with the carrier.
The government has asked state-run banks, led by SBI, to rescue Jet without pushing it into bankruptcy, two people within the Indian government have told Reuters, adding that Prime Minister Narendra Modi is seeking to avert thousands of job losses weeks before a general election.
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 complete by end-June.