Invested In Jet Airways¡¯ Stock? 99% Of Your Money Will Likely Be Lost After Bankrupt Airline¡¯s Resolution
Investors who boarded Jet Airways?last week on March 7 after the resolution filed by the Jalan Fritsch Consortium was approved by the National Company Law Appellate Tribunal (NCLAT) are going to receive a harsh awakening.
Why Jet Airways' Stock Investors Are Likely To Lose 99% Money?
When the airline's resolution plan goes into effect, they will lose 99% of their money. The resolution plan states that for every 100 shares held in Jet Airways, the departing public shareholders will receive only one share in the reorganized company.
As a result of the approval of the resolution plan, Jet Airways has increased in value by 11% during the previous five trading sessions, as per Moneycontrol report.
Based on its current price of around Rs 47, the stock commands a market-cap of Rs 539 crore.
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Here is how the restructuring of equity will be done
First, all preference shares held by then will be fully extinguished, or cancelled, along with the equity shares held by the promoters, Etihad, and financial institution, which total 8,51,98,037 shares of Rs 10 each, representing 75% of the shareholding.
The remaining shares (2,83,99,346 equity shares), which make up 25% of the equity and belong to the current public shareholders, will then have their face value reduced from Rs 10 to Re 1 per share.
Upon consolidation into the new entity, these shares will be converted into shares with a face value of Rs 10 per share. Following such consolidation, any fractional entitlements to equity shares will be rounded off to the closest whole integer.??
The Jalan Fritsch Consortium will inject new capital worth Rs 600 crore into the restructured company at a price of Rs 50 per share, with a premium of Rs 40. Additionally, the conversion of employee and worker dues and creditor debt into shares will occur at the same price (Rs 50).
In the end, public shareholders will own 2,83,99,346 shares in the new company, leaving them with 2,83,993 shares overall. After the shares are issued, the equity from new promoters will be locked in for a year.
Jet 2.0 will guarantee that, via a new issuance at market value, the public shareholding in the new company will be restored to 10% within 18 months and 25% within three years.??
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