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Turbulence hits Jet, Sahara deal
By agencies
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Tuesday, 21 March 2006, 20:30 IST
MUMBAI: While Jet Airways firmly played down talk of problems with its proposed $500 million buyout of Air Sahara, its clear that all is not well with the largest aviation deal in Indian history.
Delays in securing regulatory clearances have forced the two airlines to extend the timeline for the culmination of the deal. The senior managements of Jet Airways and Air Sahara will meet before March 24, to decide on the induction of five directors of Jet on the Sahara board.
However, according to the sources of civil aviation ministry, the proposal to change the Air Sahara board has been sent to the Home Ministry (HM) for clearance, which is still awaited. And only after that is procured, will the procedure for acquiring the airline be kicked off.
Both the airlines has also taken a decision on the revision of Escrow Account, due to expire on March 24. There is no problem in Jet-Sahara deal. Jet has received necessary approvals from the government, assured Jet Airways Chairman Naresh Goyal.
The airlines had sought from the Department of Company Affairs and the Director General of Civil Aviation (DGCA). While Jet Airways has received approval from Dept of Company Affairs for the takeover, Air Sahara is yet to get the approval on the share purchase agreement from the DGCA.
The pending approval from DGCA has early become a hurdle in the acquisition process. Jet had deposited $454.54 million in an Escrow Account in ICICI Bank on January 18 for 65 days to facilitate the transaction. According to regulations, clearance from regulatory bodies should be received before the escrow account expires.
The account, created for facilitating the acquisition, will be expiring on March, 24. If the requisite approval does not come before this date, both the companies will have to meet and decide on further course of action, said Jet Airways Executive Director Saroj Datta.
Jet Airways was however, categorical that the Jet-Sahara deal is on the right track. Both the airlines will have to sit together in the next few days to chart out future growth strategies, Datta added.