Ministry cold to new Jet stake proposal

New Delhi: Jet Airways has submitted a fresh proposal to the civil aviation ministry, which would bring down effective foreign shareholding in the company to around 80% from the current 90%. With this, the airline hopes to get government approval to its plan to raise $400 million abroad, which would be used to retire high-cost domestic debts and finance expansion.
However, the civil aviation ministry is still not willing to give its nod since it feels the proposal still breaches the overall foreign investment cap of 49% for the sector.
According to sources, the revised proposal seeks to raise the amount in such a manner that the holding of Tail Winds, an erstwhile overseas corporate body (OCB) incorporated in Isle of Man, would come down to 60% from the current 79.9%. With this, the overall effective foreign shareholding in the company would come down by about 10%. Currently, foreign shareholding in Jet is around 90%.
“Since policy remains the same, the scope for change in our earlier stand is not expected. We are, however, yet to take a final view on the proposal,” a ministry official told FE.
“Foreign holding in the company would come down from the present level after the qualified institutional placement (QIP), but it would still be around 80%, thus exceeding the limit,” the official said.
20/10/10 Nirbhay Kumar/Financial Express

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Categories: Jet Airways Oct 2010