The Hindu Business Line : Jet Air-Sahara deal is on; final word likely today

The re-make of the deal is significant for both the airlines as Rs 2,200 crore is at stake — Rs 1,500 crore in the form of a bank guarantee given by Jet, Rs 500 crore that Jet gave to Sahara in cash and about Rs 200 crore that Jet has invested in Sahara.

Mumbai/New Delhi April 10 Only the signing ceremony needs to be gone through for Air Sahara to become a part of the Naresh Goyal-promoted Jet Airways.

After months of uncertainty, dreary negotiations and intense courtroom battles, the Jet-Sahara deal is happening with the final word on the deal expected tomorrow.

The two airlines were unwilling to make the agreement public today, though word has spread that the two have informally agreed to a fresh buyout deal by Jet Airways.

The development is an upshot of the two-day-long informal talks between the two at the Hilton Towers in Mumbai, preceding the final hearing of the arbitration panel slated to start from Wednesday.

Emerging out of the informal meeting, Mr Naresh Goyal, Jet Airways Chairman, declined to comment, stating it would be sub-judice.

The airline's legal counsel, however, said the two parties have decided to resolve the issue amicably and the decision would be announced by the arbitrators on Wednesday.

Sources said Jet Airways has agreed to buy out Sahara at the enterprise value of $450 million, marginally lower than the original value of $500 million that was decided upon when the two had inked the buy-out agreement in January 2006. Jet is also willing to stick to its commitment to pay off outstanding creditors worth Rs 400 crore, which was part of the original enterprise value.

The final price will only be clear after the formal announcement on Wednesday.

After the January agreement, Jet had haggled for a price discount. It finally walked out of the deal in June 2006, after operating Air Sahara for about three months. The re-make of the deal is significant for both the airlines as Rs 2,200 crore is at stake — Rs 1,500 crore in the form of a bank guarantee given by Jet, Rs 500 crore that it gave to Sahara in cash and about Rs 200 crore that Jet has invested in the Lucknow-based airline.

Sources said Jet Airways did not want the issue to get stuck in arbitration procedures, as its funds would have been locked up. A Jet-Sahara merger will lead to the emergence of the largest private carrier in India, with a 42 per cent domestic market share. While Jet has a fleet of 59 aircraft, Sahara has 26, including 10 Boeings.

More Stories on : Airlines | Mergers & Acquisitions | Jet Airways (India) Ltd

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