May 13, 2007

Jet to raise $400mn via rights issue

The country's largest private airline, Jet Airways, which recently acquired Air Sahara for Rs 1,450 crore, today said it would raise $400 million through a rights issue to fund its expansion plans.

The Naresh Goyal promoted airline is currently in talks with investment bankers to finalize the modalities of the rights issue, which is expected in the next four months.

Industry experts said that Jet Airways could offer nearly 25 million fresh shares to existing shareholders at the prevailing stock price.

However, this will not dilute the stake of the promoter. Jet's promoter Naresh Goyal owns 80% stake in the airline.

"I am open to dilute my stake at right time. I am committed and I trust this airline. Therefore, I want to keep the control of the company," Goyal said.

Besides raising 15% of the cost of its $2.5 billion bill for 20 wide-bodied aircraft for international operations and 10 Boeing 737s for domestic operations, the airline is scouting funds for working capital and other expansion plans.

In addition to $400 million, Jet Airways is also looking at raising $50 million for turning around Air Sahara, which is now re-branded as JetLite. The source for this funding is yet to be decided.

"We expect to turnaround JetLite in a year's time. I firmly believe there is no low cost carrier in India. Therefore, I do not want to disappoint my passengers. With fewer frills, I will however, be giving a small packed lunch or other food items on JetLite flights, which will not cost as much," Goyal said, on the sidelines of the presentation of its newly-acquired Boeing 777-300 ER and Airbus 330 aircraft.


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