Jet to sell 2.73 crore shares to Etihad

Mumbai, April 24, 2013 (IANS): Airline major Jet Airways said Wednesday it would seek shareholders' approval through an extraordinary general meeting for issuing the company's equity at Rs.10 per share to the Abu Dhabi-based Etihad Airways. "The board of directors has approved, subject to compliance with applicable laws and regulations, the issuance, by way of a preferential allotment... of 27,263,372 (2.73 crore) equity shares of the face value of Rs.10 to Etihad Airways at a price of not less than Rs.754.73 (including premium of Rs.744.73 per share) per equity share," the company informed the Bombay Stock Exchange (BSE) Wednesday. "The board of directors has granted approval for the company and Etihad to enter into, inter alia, the investment agreement in relation to such issuance and allotment and other documents incidental thereto. The said preferential allotment is subject to various conditions precedent including regulatory approvals." The extraordinary general meeting of shareholders will be held later on. The deal is expected to garner around Rs.2,000 crore for Jet Airways. The two airlines were negotiating a Jet Airways' stake sale agreement since last year. However, the deal was delayed due to investment protection and management control issues. The Jet Airways' scrip at the BSE had risen by 4.43 percent or 24.35 points up at Rs.573.85 per share from its previous close of Rs.549.50. Talk of a possible stake sale has been doing the rounds for quite some time, ever since the government allowed foreign airlines to pick up 49 percent shares in domestic carriers last year. Jet-Etihad Airways concluded a deal Feb 27 to acquire three Jet Airways slots at London airport for $70 million. In February, Etihad chief executive James Hogan and Jet Airways' chairman Naresh Goyal led a joint delegation of both the airlines and separately met Finance Minister P. Chidambaram, Civil Aviation Minister Ajit Singh and Commerce Minister Anand Sharma to apprise them about a possible stake sale deal. Last year, the government allowed foreign airlines to invest up to 49 percent in private domestic carriers. Foreign carriers were not allowed to directly invest in Indian carriers for security reasons although 49 percent FDI by non-airline players was allowed. The Indian civil aviation sector has been going through a tough operating environment as high fuel and interest costs have hurt it. The government expects that the decision will help bring in more funds to the airlines that have been cold-shouldered by banks.