Companies

Jet Airways lenders to approach SEBI for removing 5% circuit limit on shares

Forum Gandhi Mumbai | Updated on July 10, 2020 Published on July 10, 2020

The Committee of Creditors (CoC) of Jet Airways is likely to send a recommendation letter to the Securities and Exchange Board of India (SEBI) to remove the 5 per cent circuit limit on the airline's stock trading.

This was discussed at the CoC meeting held on Thursday. The circuit limit of 5 per cent is impacting the fluidity of the stock trading and thereby impacting the valuation, it was felt. Potential bidders for the airline would like to get the market value before placing a financial offer.

A circuit limit of 5 per cent on Jet stocks was imposed last year by the stock exchanges. Under normal circumstances, the circuit limit gets triggered when the share price swings 10 per cent up or down. But in the case of Jet airways, the exchanges were forced to reduce the limit to 5 per cent after the company went into the insolvency process and could not submit information as required under disclosure norms.

Last year, SBI dragged the company to the insolvency court over unpaid dues to the tune of ₹8,500 crore. Jet Airways has been trading under ‘Z’ group category which includes companies which have failed to comply with listing requirements and/or have failed to resolve investor complaints. The security of the company was shifted from rolling segment to trade-for-trade segment, wherein the settlement in the security will take place on a gross basis with 100 per cent upfront margin and 5 per cent price band.

The CoC has received interest from three entities to acquire the airline. But none of them has so far placed a financial bid. One of the potential buyers sought more time to do the due diligence so the CoC has extended the last date for placing a financial bid.

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Published on July 10, 2020
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