Jet Airways and its partner Etihad Airways are in advanced talks to provide financial support to the struggling Indian airline, which could potentially result in the Gulf carrier raising its stake, sources with direct knowledge of the matter told CNBC-TV18 on Wednesday.
The Abu Dhabi-based Etihad owns 24 percent in Jet, which has been beset by a severe cash crunch. Jet promoter Naresh Goyal is at Etihad’s headquarters in Abu Dhabi to etch a deal to avert a “distress” sale to Tata Sons, the sources said. They asked not to be named.
As part of the negotiations, Etihad may provide financial support to Jet Airways to meet its immediate liquidity requirement. This may also lead to Etihad increasing stake in Jet Airways to be equal stake partners with Naresh Goyal.
According to the sources, the broad contours of the deal will include Etihad merging its 50.1 percent stake in JetPrivilege into Jet Airways, releasing $150 million cash to the airline to meet it liquidity requirements. Etihad may also increase its stake in Jet Airways to over 35 percent.
Naresh Goyal may expect a valuation of half a billion dollars for JetPrivilege. Sources suggest that Etihad’s stake increase in the airline may be at a substantial premium to the current market price of Jet Airways. This will bring Naresh Goyal's stake to below 51 percent.
Negotiations between the two parties are at an advanced stage but many aspects are yet to be finalised, as per the sources. "It is a logical solution for Jet Airways in the interest of all shareholders. Sell cheap at this juncture will deplete value for all,” said the sources.
Experts have stated that Jet Airways with about $1.1 billion debt needs $300 million of immediate cash infusion.
22/11/18 Nisha Poddar/CNBC TV18
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The Abu Dhabi-based Etihad owns 24 percent in Jet, which has been beset by a severe cash crunch. Jet promoter Naresh Goyal is at Etihad’s headquarters in Abu Dhabi to etch a deal to avert a “distress” sale to Tata Sons, the sources said. They asked not to be named.
As part of the negotiations, Etihad may provide financial support to Jet Airways to meet its immediate liquidity requirement. This may also lead to Etihad increasing stake in Jet Airways to be equal stake partners with Naresh Goyal.
According to the sources, the broad contours of the deal will include Etihad merging its 50.1 percent stake in JetPrivilege into Jet Airways, releasing $150 million cash to the airline to meet it liquidity requirements. Etihad may also increase its stake in Jet Airways to over 35 percent.
Naresh Goyal may expect a valuation of half a billion dollars for JetPrivilege. Sources suggest that Etihad’s stake increase in the airline may be at a substantial premium to the current market price of Jet Airways. This will bring Naresh Goyal's stake to below 51 percent.
Negotiations between the two parties are at an advanced stage but many aspects are yet to be finalised, as per the sources. "It is a logical solution for Jet Airways in the interest of all shareholders. Sell cheap at this juncture will deplete value for all,” said the sources.
Experts have stated that Jet Airways with about $1.1 billion debt needs $300 million of immediate cash infusion.
22/11/18 Nisha Poddar/CNBC TV18
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