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Monday, 25 March, 2019, 09 : 00 AM [IST]

Etihad to take final call on its Jet stake on March 31

The board of Etihad Airways PJSC will meet March 31 to take a final decision on whether the Abu Dhabi-based carrier should make a fresh investment in Jet Airways (India) Ltd or exit the ailing airline, two people directly aware of the development said, reports Mint.

Tony Douglas, CEO, Etihad Airways, who met State Bank of India (SBI) Chairman Rajnish Kumar in Mumbai on March 18, has sought a term sheet from Indian lenders, which require them to buy Etihad’s 24% stake in Jet Airways if the UAE airline decides to sell. Alternatively, Etihad will make fresh investments in the Mumbai-based carrier only after the lenders agree to fulfil specific conditions.

“Etihad has laid down certain conditions, which includes removal of the Naresh Goyal from the board altogether," one of the two people cited earlier said on condition of anonymity. The airline has also sought a guarantee from the lenders for offering more credit to Jet Airways after the equity infusion, the person added.

“Etihad hopes that the lenders will be able to address all these issues before the board meeting later this month," the second person said, requesting anonymity. “Etihad has also sought a ‘put option’ through which it can sell its entire stake to the lenders (led by SBI) if it is not happy with the revised resolution plan."

Under the “put option", the seller gets the right but not the obligation to sell assets at an agreed price on or before a particular date. During his meeting with the SBI chief, Douglas offered to sell Etihad’s 24% stake to the state-run lender at INR 150 per share, or about INR 400 crore for the full stake.

The development comes after weeks of negotiation between the two sides. Etihad was on the verge of making more investments in cash-strapped Jet Airways, but later dropped the plan. “Etihad is of the view that the lenders have been rather soft on Goyal by allowing him to retain the clawback option in the airline," the second person said.

The board of Jet Airways has called a meeting in London late on Sunday to discuss the issue of resignation of the promoters, a third person said, requesting anonymity.

Founder and Chairman Naresh Goyal owns a 51% stake in Jet Airways, along with his wife, Anita, who is also on the airline’s board.

Jet Airways and SBI did not respond to queries till the time of publishing this story. (Source: Mint)
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