| Hitting an air pocket
June 20: The Sahara group wants Jet to complete the buyout as soon as possible but is willing to agree to a longer time-frame for regulatory approvals for the purchase to come through.
However, the group is unwilling to reduce the asking price for the purchase from Rs 2,300 crore that had been negotiated between the two sides earlier this year.
Reports suggest the Naresh Goyal-run airline wants a relook at the price.
Sahara sources said group officials who held a series of discussions with Subroto Roy in Lucknow today decided that they would ask Jet to complete the purchase formalities as soon as possible. But if minor regulatory approvals were still due, they would extend the time limit for closing the deal, which otherwise expires on June 21. They, however, stressed that Jet has not made any “official or unofficial” attempts to seek a price reduction. “We are simply reacting to media reports when we say that the price remains fixed.”
The latest imbroglio seems to have been sparked off by Indian security agencies clearing the names of four Jet top officials who will be inducted into the Sahara board while delaying clearance for Goyal. Till all clearances come through, regulatory approvals for the deal cannot be given by the director-general of civil aviation. Top civil aviation ministry officials said they expected a response from the home ministry on Goyal’s clearance by tomorrow.
Sahara sources said the clearances they had obtained for four Jet nominees on the Air Sahara board should suffice for the time being as “Goyal can hardly be denied clearance since these same security agencies have cleared him to chair Jet Airways”.
Goyal is also reportedly unhappy over a number of issues, including Sahara's bid to to get him to accept some liabilities that the airline is carrying. The Jet chief had communicated his displeasure to Sahara chief Subroto Roy in a letter dated June 10.
Jet Air rejected reports that it wanted to back out of the deal or that it wanted to renegotiate the price. In an official statement it said, “We are still waiting for all regulatory approvals to be in place.”
In Mumbai, the Jet Airways spokesperson said if the regulatory approvals didn’t come through by midnight tomorrow, the boards of Jet and Air Sahara will meet and decide whether or not to go through with the deal.
Back in January, after months of speculation, Jet had taken over Air Sahara for Rs 2,300 crore and announced that the two airlines would be merged after formal regulatory approvals were received. In March, it paid Rs 500 crore, including a non-refundable Rs 100 crore for the airline, after reports of a spat between the two groups over valuation of Air Sahara, a fight which both sides denied took place.
Goyal, who is on a visit to London, is likely to hold a board meeting soon to decide his course of action following the delay in clearances. Earlier, Jet officials had let it be known that they would run Sahara as a wholly-owned subsidiary for some more time before merging it with itself.
Though the first step to merge the two airlines was taken by end-March when the civil aviation ministry's aircraft acquisition committee came out with new guidelines which allowed transfer of one airline's aircraft, route rights, parking slots and bays to another, several regulatory hurdles slowed the process.
The two airlines also need the formal approval of a high court for the merger. The merger has been controversial from the start with several Left MPs writing to the Prime Minister seeking investigations into stock market operations prior to the deal as well as alleged violations of the monopoly laws.
The Jet stock today appreciated by over 2 per cent on reports that the takeover of beleaguered Air Sahara appeared to have foundered.