The Hindu Business Line : Jet-Air Sahara deal in turbulence

The Rs 2,200-crore acquisition of Air Sahara by Jet Airways has run into rough weather, with the action on the deal moving from the boardroom to the courtroom.

There is, however, no final word yet from both the airlines on the fate of the share purchase agreement. This agreement was to expire midnight Wednesday if certain "condition precedents" were not satisfied by either of the parties.

Speaking to newspersons on Wednesday evening, the Air Sahara President, Mr Alok Sharma, said that if the deal did not go through, then from Thursday onwards the Air Sahara management would run the airline on its own.

Asked if it was possible to run the airline with four directors, Mr Sharma answered in the affirmative.

While the Government had given security clearance to four Directors, the Jet Airways Chairman, Mr Naresh Goyal, is yet to receive clearance.

Mr Sharma also said that the company had made an offer on Tuesday to Jet Airways to extend the date for the closure of the deal by 15 days, but had not received any response.

Earlier in the day, Sahara India Commercial Co-operation Ltd alleged before the Lucknow District Court that Jet Airways had terminated the "contract" and sought a stay in the operation of the escrow account by Jet Airways and ICICI Bank.

The monies for the deal have been placed in an escrow account with ICICI Bank in Mumbai.

Admitting the petition filed under Section 9 of the Arbitration and Conciliation Act 1996, the Lucknow District Court has in its order stated that up to June 23 Jet Airways shall not withdraw the amount deposited in the escrow account.

Moreover, ICICI Bank has also been restrained from making any payment to Jet Airways.

The court has given time till June 23 for Jet Airways to file objections to Sahara's contention on the deal.

Meanwhile, Jet has approached the Mumbai High Court seeking a similar restraint on Air Sahara, saying that the conditions agreed on such as the transfer of infrastructure facilities by June 21 has not been met; hence, Air Sahara should not be allowed to operate the escrow account.

The petition filed by Jet Airways was, however, not admitted today.

Earlier in the day, after a meeting in the Home Ministry on issues related to aviation security, the Home Secretary, Mr V.K. Duggal, said: "When any order is issued, the media will be informed."

There had been speculation that today's meeting may give security clearance to Mr Goyal, thereby paving the way for the acquisition to go through before the expiry of the midnight deadline.

While the key players involved in the deal are silent now, almost six months after it was signed, a number of questions remain unanswered.

There is no clarity as to why Government agencies should have trouble in security clearing the appointment of Mr Goyal on to the Air Sahara board when he is already running another airline in the country.

Besides, there is no clarity on how a deal could have suddenly turned sour within six months, a deal that Mr Goyal had earlier said was signed after the auditors, advisors, and consultants, had studied recent airline mergers, including that of KLM and Air France.

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