Jet Airways promoter Naresh Goyal may finally be able to sell a share in his airline to Etihad Airways with the Foreign Investment Promotion Board (FIPB) expected to clear the deal on Monday. The revised shareholders agreement (SHA), submitted by Jet, as also a letter explaining the clauses of the commercial cooperation agreement (CCA) between Jet and Etihad, are understood to have convinced the government that effective control would stay in the hands of the Indian promoters. The Jet stock soared 17.43% on Friday to R395.50 on the BSE in anticipation of the sale being closed out.
An aviation ministry official, however, said on Friday the ministry would express its views on the CCA at the FIPB meeting. If other countries feel that Jet Airways is being controlled by Etihad due to their close operational links, Jet Airways may no longer be considered an Indian airline and may lose its bilateral flying rights, the official said.
The Abu Dhabi-based Etihad proposes to pick up a 24% stake in Jet via a preferential issue of shares at R754.73 per share and infuse R2,058 crore in Indias largest publicly traded airline. Foreign carriers are allowed to pick up a maximum stake of 49% in Indian airlines.
The new agreement says that board decisions can be passed with a simple majority; earlier, a 75% majority was specified. Also, Etihad can now have a member on the boards nomination and audit committees only if the board nominates the foreign carriers member. In the earlier agreement, Etihad was given the right to have one member each on both the committees. While initially Etihad was given the right to appoint an executive vice-chairman, the foreign airline was subsequently denied this right.
Moreover, board meetings, AGMs and EGMs will be considered to have a quorum even if a single Etihad nominee is not present. Given these changes, Etihad will now be treated as a public shareholder and not person(s) acting in concert, which would eliminate the need for an open offer.
Etihad has also agreed to have only two members on the Jet Airways board instead of three earlier. Jet has only changed the SHA and the changes are more or less in line with what Sebi had sought, said a person in the know of the development. The commercial cooperation agreement stays as it is and the concerns raised by the FIPB have been addressed in the