Jet AirwaysNSE -3.54 %, partner Etihad Airways and banks have been holding talks on a rescue plan for the cash-strapped Indian carrier, although they are yet to seek any regulatory approvals or exemptions, a top government official said.
“We are aware that the airline and its lenders are in discussions. While we may be informally aware of the situation, discussions are being held between lenders and promoters,” aviation secretary RN Choubey said.
Only after they agree on a resolution plan, can they approach the Reserve Bank of India, the Securities & Exchange Board of India, the government and the Directorate General of Civil Aviation, he said.
“If there is any exemption to be sought, that should be between the airline and that agency and the civil aviation ministry has no role to play,” said Choubey, while replying to a question on whether the government would recommend any exemptions from Sebi in the event of a deal between Jet and Etihad.
He said the government will step in only if the substantial ownership and effective control norms for airlines are violated. “It is not the government’s job to get into deal making for private companies. Under no circumstance will substantial ownership and effective control clause be relaxed,” Choubey added.
Etihad currently owns 24% in Jet Airways and can increase its stake in the airline to 49%. Etihad may agree to infuse funds by increasing its holdings in the airline if it is not required to make an open offer.
It also wants exemption from preferential pricing guidelines, stating that the fair price for Jet Airways shares is Rs 140 to Rs 150, which is as much as 48% lower than Wednesday’s closing price of Rs 271.
Etihad has sought the help of State Bank of India NSE 0.08 % to get approval from the government. The Abu Dhabi-based airline is in talks with Sebi for exemptions from equity infusions norms.
Etihad has also sought that the CEO and CFO of the airline should be named in the resolution plan, with final decisions on both positions to be taken by the reconstituted board of the company.
Source: Economic Times