On the cards are plans to pre-pay its long-term debt besides redemption of cumulative convertible redeemable preference shares.
The private carrier has long-term unsecured loans and subordinated debt obligation aggregating Rs 3,148 crore (Rs 31.48 billion)as on September 30, 2004.
Around Rs 1013 crore (Rs 10.13 billion), representing 32.2 per cent, of the company's debt is on a floating rate basis, linked to the international benchmark of London inter-bank offered rate.
The private carrier will pre-pay the principal Rs 301.6 crore (Rs 3.01 billion, excluding interest) due up to March 2006 and Rs 130.5 crore (Rs 1.30 billion) to IFC against issue of CCRPs at an interest rate of 18 per cent.
Besides, it will also prepay Rs 360 crore (Rs 3.6 billion) to the Infrastructure Development Finance Company on a borrowing at a coupon of 12.45 per cent. While the repayment to IDFC would be made in August this year, the CCRPS issued to IFC would be redeemed within 90 days of the completion of the IPO offer.
According to the company, the proposed IPO is expected to correct the existing capital structure, which is skewed in favour of debt.
Owing to the capital intensive nature of the airline business, Jet's pre-issue long-term debt to equity ratio is 10.84.
While the company's interest outgo in fiscal 2004 was Rs 289.1 crore (Rs 2.89 billion), it was Rs 256.1 crore (Rs 2.56 billion) in 2003.
On the face of an over-leveraged scenario, the airline uses derivative instruments to hedge against adverse movements in interest rates to reduce the cost of debt and has got covered the underlying notional amount of Rs 2,127 crore (Rs 21.27 billion), which represents 75 per cent of its loan exposure (excluding subordinated debt).
Jet Airline reported a net profit of Rs163 crore (Rs 1.63 billion) for the year ended March 31, 2004.
For the first six months of 2004-05 ending September 30, 2004, the carrier reported a total revenue of Rs1,966.67 crore (Rs 19.66 billion) and a net profit of Rs129.35 crore (Rs 1.29 billion).
