Thursday, April 12, 2007

Jet Airways to buy Air Sahara for around Rs. 1450 crores

Jet Airways has agreed to buy out Air Sahara for around Rs. 1450 crores, lower than what it had agreed to pay (Rs. 2300 crores) in January 2006 when the two had signed a contract that got into trouble and litigation.

Both the airlines have seemed to have reached an agreement on the commercial aspects of the deal, which will be submitted to the arbitration panel on 12th April at 5.30 pm, after two days of hectic negotiations. The offer includes Rs. 500 crores that Jet had paid Air Sahara last year. However, it is unclear whether the deal includes the Rs. 300-350 crore-debt on the books of the latter. The offer will not include Rs. 180 crores that Jet had already paid in April 2006 for the normal business operations of Air Sahara.

Jet Airways, in January last year, had signed a share-purchase agreement to acquire 100% equity of Air Sahara. As part of the deal, Jet paid Rs. 180 crores for Air Sahara’s revival and Rs. 500 crores for Air Sahara shares besides depositing Rs. 1500 crores in an escrow account opened for the purpose. However, the deal got into trouble after Jet cited lack of government clearance as the reason to walk out of the deal. The matter then went to court that ordered for the arbitration.

Read more in The Economic Times.

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