Debt-laden Jet Airways board on Thursday approved a bank-led provisional resolution plan (BLPRP) which will pave the way for conversion of the airline's debt into equity, making lenders the largest shareholders in the company.

The plan proposes restructuring, under the provisions of the Reserve Bank of India's February 12, 2018 circular, to meet a funding gap of nearly Rs 8,500 crore.

After receiving approval from shareholders at their meeting scheduled to be held on February 21, BLPRP proposes to convert lenders debt into 11.40 crore shares of Rs 10 each, which will result in lenders becoming largest shareholders of Jet Airways. The allotment of 11.40 crore shares will be made at an aggregate consideration of Re 1 as per RBI February 12 circular.

If the shareholders approve the plan, lenders will hold 51 percent, founder and chairman Naresh Goyal 25.5 percent and Etihad Airways stake will have to 12 percent in Jet Airways.

The plan also proposes that there will be some interim funding that will come in from the domestic lenders led by State Bank of India, however, the terms of that loan have yet to be agreed. In addition, it will also seek to give lenders the right to nominate members on the board of Jet Airways.

CNBC-TV18's Latha Venkatesh decodes the plan and shares the possible road ahead for the carrier.

First Published:Feb 14, 2019 9:55 PM IST