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Shareholders Approve Jet's Bailout Plan, OYO in Japan, Adani Group Bids for Six AAI Airports, Financial Regulator of India Tightens Norms Around Lending to NBFCs et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Feb 23, 2019 2:13 PM 4 min read
Editorial

Shareholders of Jet approve bailout plan to let lenders convert debt into equity. Commodities arm of Motilal Oswal and India Infoline not 'fit and proper’. OYO begins operations in Japan. Adani Group bids for six AAI airports. RBI tightens norms around lending to NBFCs.

 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

 

AVIATION

Shareholders of Jet approve bailout plan to let lenders convert debt into equity. 
 

Rescue Operation Under Way: 97% shareholders of Jet approved the airline’s bailout plan to let lenders convert debt into equity through issuance of 114 million fresh shares. 
 

Modus Operandi: The approval will allow the consortium of lenders led by SBI to become majority stakeholders in the carrier and also infuse funds in the beleaguered airline.
 

Backstory: The bailout plan proposes restructuring to meet a funding gap of nearly INR8,500cr. The gap is to be met through a mix of equity infusion, debt restructuring, sale, SLB (sale and lease back), and refinancing of aircraft, among others.
 

Touch-and-Go: Read this article to know how Jet’s rescue plan may only be a touch-and-go.
 

Brownie Points: Airlines, in the recent times, have been going bust in droves. Click here to know why. 

 

MISGOVERNANCE

Commodities arm of Motilal Oswal and India Infoline not 'fit and proper’, reports SEBI. ED probes L&FS Employee Welfare Trust.
 

'Fit and Proper’: SEBI in an order on Friday declared that the commodity broking arms of Motilal Oswal and India Infoline (IIFL) are not ‘fit and proper’ to undertake commodities derivative trading.
 

Zoom Out: The announcement was made as part of an ongoing investigation into the NSEL case, wherein the market regulator is probing a INR5,600cr payment default which broke out at the spot commodity trading platform NSEL in 2013 in which broking firms like Motilal Oswal Commodities Broker are alleged to have involved in misselling of NSEL contracts without having underlying commodities in the warehouses.

Some of the other leading brokers who are being probed in the NSEL case are Anand Rathi Commodities, Philip Commodities and Geofin Commodities.
 

IL&FS Under Lens: The Enforcement Directorate is probing the IL&FS Employee Welfare Trust over possible irregularities, as part of its investigation into alleged money laundering related to subsidiaries of Infrastructure Leasing & Financial Services (IL&FS). 
 
A case under the provisions of the Prevention of Money Laundering Act (PMLA) has been registered against ILFS Rail Ltd, ILF Transportation Networks Ltd, and senior management of IL&FS including former CMD Parthasarathy and Sankaran. According to the ED, the persons involved floated shell companies to award contracts and allegedly siphoned off INR74 crore that was used to purchase assets.

 

COMPANIES

OYO begins operations in Japan. Adani Group bids for six AAI airports.
 

Going Places: OYO Hotels and Homes begins operations in Japan.
 

Through a joint venture with Yahoo Japan Corporation (Yahoo! JAPAN) to form OYO Technology & Hospitality Company, Japan, the hospitality chain intends to expand its housing rental product - OYO Living (to be renamed as OYO Living) to Japan. 
 

The news comes only days after OYO announced its launch in Saudi Arabia. 
 

Adani to Fly: After making its mark in power, ports, real estate, agriculture and defence, among others, the Adani Group has now made a bid for six airports put up for privatisation by the Airports Authority of India. 
 

 

The airports are Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvanthapuram and Mangaluru.

 

MONEY

RBI tightens norms around lending to NBFCs.
 

The Central Bank tightened norms for lending to NBFCs, making it more expensive for banks to lend to them.
 

As per the new norms, a loan to an NBFC which owes banks INR200cr or more and is un-rated will now attract a risk weight of 150%. Any NBFC to which banks have an exposure of INR100 crore or more which was earlier rated but subsequently un-rated will also attract a risk weight of 150%.
 

Added Pressure: The news comes at a time when NBFCs and Housing Finance Companies (HFCs) have already been facing financing and liquidity pressure on back of concerns over asset-liability mismatches and corporate governance failure at institutions, such as IL&FS and DHFL.
 

Bonus: Read this article to know how your insurance premium is likely to cost less from April 1, with the industry switching to the

 

latest statistical tables on mortality to review the tariffs it charges for covering lives.

 

TECH

Twitter co-founder Evan Williams steps down from company’s board.
 

What You Need to Know: Twitter co-founder Evan Williams is set to step down from his 12-year old stint on the Board of the social media giant.
 

Williams served as Twitter's CEO from 2008 to 2010 and now is the Chief Executive of publishing site Medium.com.
 

Unbeknown: Millions of smartphone users confess their most intimate secrets to apps, and in many cases, that data is being shared with someone else: Facebook. Click here to know what we are talking about.

 

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