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Jet to raise $500 Million from DBS Bank, shares plunge
By siliconindia
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Wednesday, 24 December 2008, 23:08 IST
Bangalore: The Mumbai based private carrier Jet Airways is planning to garner $500 million as a medium-term loan from Singapore-based DBS Bank. However, the news has already affected the airline with the it's stock falling by 1.76 percent on Wednesday afternoon.
The company executives have decided to approach foreign banks to raise their working capital requirements. "We are looking at debt because we cannot undertake a capital raising exercise in such a volatile market. Such a move makes sense, given the airline's debt-equity ratio at 6.49 in March," a report in Financial Express said, quoting an anonymous executive.
Jet's shares plunged 7.53 percent on the BSE on Tuesday to close at 
165.20. Earnings per share, according to the September quarter figures, stood at (-)44.54, compared with 16.61 at the end of the June quarter. So, analysts felt raising debt would place additional strain on Jet's balance sheet. Sandeep Shenoy, strategist, Pioneer Intermediaries said, "In a bear market, shares of Jet, like other companies, have become more risky and investors usually avoid exposure to such stock. If the company doesn't have any other option, it will have to raise funds through the debt route. But it will have to pay a higher rate of interest." The company's interest liability as a percentage of operating income stands at over five percent, going by this year's Q2 results, while it posted a net loss of 384 crore.
165.20. Earnings per share, according to the September quarter figures, stood at (-)44.54, compared with 16.61 at the end of the June quarter. So, analysts felt raising debt would place additional strain on Jet's balance sheet. Sandeep Shenoy, strategist, Pioneer Intermediaries said, "In a bear market, shares of Jet, like other companies, have become more risky and investors usually avoid exposure to such stock. If the company doesn't have any other option, it will have to raise funds through the debt route. But it will have to pay a higher rate of interest." The company's interest liability as a percentage of operating income stands at over five percent, going by this year's Q2 results, while it posted a net loss of 384 crore.