Jet-Sahara deal in trouble? - Airliners-India

saurabhm_101 · Member

Jet-Sahara deal in trouble?

the_380 · Member

Frankly if u ask me i had a doubt in my mind

remember at the start of Sahara bid Kingfisher offered less. Then 9W set a very high amt and the deal was cleared by the Sahara board.

But i doubted that 9W wud pay so much for such an airline

karatecatman · Member

http://www.business-standard.com/common/storypage_c.php?leftnm=11&bKeyFlag=IN&autono=2111

Jet likely to scale down Sahara bid

Our Corporate Bureau / New Delhi/Mumbai June 20, 2006

Jet Airways is expected to try and drive down the price it has to pay for Air Sahara — $500 million according to the acquisition agreement signed in January — by using the example of Air Deccan.

A decision regarding this will be taken in the next 24 hours, before the deadline to conclude the deal expires on the midnight of Wednesday. The board of Jet Airways is expected to meet tomorrow to finalise the course of action — including lowering the bid price or a possible cancellation of the deal.

According to sources close to the development, Jet’s argument is that Air Deccan, which owns more aeroplanes and a higher market share than Air Sahara, is valued at about $200 million. On the other hand, Jet is to pay $500 million for Air Sahara, whose entire fleet is leased and which flies fewer routes than Deccan.

“Technically, there is no problem for Jet in acquiring Air Sahara as it can extend escrow account for another 45 days and go ahead by appointing another Jet executive in place of Goyal. But this dilly-dallying points at a possible renegotiation of value of Air Sahara,” sources said.

Naresh Goyal, chairman, Jet Airways, is personally heading the negotiations with Air Sahara. Jet sources also said Goyal had written to the Air Sahara management earlier this month, expressing unhappiness over the slow progress in integrating the two companies and getting all the regulatory approvals. They said Jet Airways was also unhappy over a number of issues relating to operations, management and finances of Air Sahara.

The deadline for the escrow account, which was extended by three months on March 23, expires tomorrow. Jet Airways had paid a further advance of Rs 500 crore to keep the deal on.

The home ministry’s clearance for the appointment of Goyal as the chairman of Air Sahara has not come yet. Also, the Directorate General of Civil Aviation has not approved the deal or transfer of Air Sahara’s assets to Jet Airways.

The home ministry has convened a meeting tomorrow to discuss the issues related to Goyal’s induction in the Air Sahara board. “Since the escrow account will expire tomorrow, the government has decided to meet to take a final decision on pending security clearance for Jet Chairman’s induction in Air Sahara board,” said sources.

Both Jet and Air Sahara executives refused to officially comment on the issue and said they were legally bound not to make any announcement before the regulatory approval.

“Jet Airways wishes to clarify that it is still awaiting all the regulatory approvals and the fulfillment of all conditions precedent,” Jet said in a press release today.

the_380 · Member

9W cannot pay so much..they will try to reduce it for sure and now with 9Ws shares running low from 1100s to 600s

-- Edited by the_380 at 01:45, 2006-06-21

saurabhm_101 · Member

sahara claims that re-negotiation on the price they wont accept but are ready to extend the deadline by another 15 days

the_380 · Member

Lets wait and watch

VABBy · Member

This is turning out to be can of worms lets see wat happens

Akshay · Member

Check this too:

http://www.hindustantimes.com/news/181_1724501,00020016.htm

The first airline merger between Jet Airways and Air Sahara is in the danger of falling apart, as the latter toughened its stand on Tuesday against Jet's proposal for revaluation of the Rs 2,300 crore deal -- escrow account for which is set to expire in less than 24 hours.

Even as the civil aviation industry spent the whole day speculating whether or not the deal would come through, Air Sahara President Alok Sharma broke the silence late in the evening, saying that it would not renegotiate the deal struck with the Jet Airways on January 19.

Though there were no specific communication from Jet Airways, feelers were coming from that side about a cut of 10 to 20 per cent of the agreed deal amount, he said.

Air Sahara was willing to grant another extension of 15 days for the share purchase agreement to materialise. But if the deal falls apart, Sahara would operate the carrier on its own from the day after, Sharma said.

Amid the uncertainty over the takeover of Air Sahara by Jet Airways, Union Home Ministry said it would take a decision on various issues, including security aspects, on Wednesday.

"Totality of several factors are being examined including security clearance.The matter is under consideration and a decision... Taken tomorrow," a Home Ministry official said.

Central security agencies had cleared the name of Naresh Goyal two months back and the file had been sent to the Union Home Ministry for further action.

"We are still waiting for all regulatory approvals to be in place" was all Jet had to say.

There might seriously be something going on.

Akshay

DELAPPROACH · Member

CAN SOMEONE CONFIRM THEN WHAT WILL HAPPEN TO 9W ATQ-LHR FLIGHTS AS THESE ARE SUPPOSED TO BE OPERATED BY S2 767-300.I THINK THESE FLIGHTS ARE BEGINNING FROM 28 JUNE.

karatecatman · Member

www.ptinews.com

The drama begins:

Sahara files caveat

Lucknow, June 21 (PTI) Air Sahara has filed a caveat in the Allahabad High Court regarding the Rs 2,300 crore buy-out deal with Jet Airways, sources familiar with the development said today.

-- Edited by karatecatman at 16:29, 2006-06-21

-- Edited by karatecatman at 16:46, 2006-06-21

karatecatman · Member

Kingfisher Airlines not interested in acquiring Air Sahara

New Delhi, Jun 21 Amid uncertainty over the fate of the Rs 2,300 crore Jet-Sahara deal, Vijay Mallya-promoted Kingfisher Airlines today ruled out reviving plans for acquiring Air Sahara even if the deal with Jet falls flat.

When contacted Mallaya told PTI: ‘‘I was the first one to decline... and even now I have no plans to enter into negotiations with Air Sahara.

’’...There have been speculation over the deal falling through. I have nothing to say on this,’’ he added.

Meanwhile, both Air Sahara and Jet Airways declined to comment on the developments.

karatecatman · Member

Yadav releases RAW report on Goyal

[ Wednesday, June 21, 2006

http://timesofindia.indiatimes.com/articleshow/1665134.cms

NEW DELHI: Pointing out that civil aviation minister had denied Jet chairman Naresh Goyal clearance because of the serious concerns raised by the home ministry, JD(U) chief and former civil aviation minister Sharad Yadav wondered "why is the security clearance being given" to the Jet chief now?

He also released the report from the country's external intelligence agency, RAW, which the home ministry had cited to deny the clearance to Goyal.

In its letter to the home ministry, RAW had referred to concerns expressed by investigating agencies about the "large dubious investments" by Gulf sheikhs, Mumbai underworld as well as smugglers in the airlines.

Besides, the home ministry quoted RAW as saying that Goyal had enlisted the services of underworld dons to settle financial disputes.

"Inputs further indicate intermittent contacts between Naresh Goyal and underworld dons Chhota Shakeel and Dawood Ibrahim to settle financial issues.

There is strong suspicion that part of Goyal's investments may have accrued through the assistance of underworld groups, prominently headed by Dawood and Chhota Shakeel," RAW told the home ministry in 2001.

The letter dates back to the tenure of NDA government when the security concerns expressed by intelligence agencies about Goyal, particularly about the source of Jet Airways funds, entered the public realm.

-- Edited by karatecatman at 16:45, 2006-06-21

karatecatman · Member

Neither here, nor there; Sahara crew suspended in mid-air

New Delhi, Jun 21

Moving from one employer to another is easier said than done for Air Sahara’s crew, who are all dressed up in Jet Airways’ colours but do not know where to go.

With Jet’s takeover of Air Sahara hitting a security roadblock, employees are a bit confused about what would happen if the deal falls apart.

Employees of Air Sahara, especially the crew members, are all set to fly with Jet on the Amritsar-London sector after having undergone training by the new employer in Mumbai.

Even the new uniforms for Air Sahara’s employees have been prepared and delivered to them.

Some of the employees said that Air Sahara crew members, who have been abosrbed in Jet, have been getting visas on behalf of Jet Airways assuming the deal would be completed soon.

But the ‘‘environment is absolutely normal in offices... Jet Airways is fully in control of Air Sahara’s offices and their (Jet’s) policies are being implemented,’’ they said.

Earlier today, Jet Airways issued an official statement saying it was awaiting regulatory approveals to be in place. Sahara officials, when contacted by PTI, declined to comment on the developments.

karatecatman · Member

____________________________________________________

Air Sahara had made losses of Rs 226 crore till January 18, said sources to PTI.

Between January and March, it suffered a loss of around Rs 160 crore.

But even if Jet cancels the deal, it stands to lose Rs 100 crore already paid to Air Sahara. The amount, given upfront after signing the initial agreement, was paid without any guarantees.

Also, Jet paid an advance of Rs 500 crore against guarantees in March. Air Sahara will have to return this amount if the deal falls.

‘‘The deal didn’t make sense for Jet,’’ said an industry source. ‘‘It was over-priced and Jet would have got nothing out of it. It didn’t have a brand and all the aircraft were leased. It has lost market share (down to eight per cent from 10) and integration is a huge issue with pilots and engineers leaving all the time.’’

The trigger could have been the delay in getting security clearance for Mr Goyal to be on the board of Air Sahara. Airlines need to get the members of their board cleared by the home ministry.

With the US probing the antecedents of the airline, the government is going slow on clearing Mr Goyal. However, the real reason for Mr Goyal backing out of the deal may have a lot to do with valuations going haywire, sources said.

Another obstacle for the deal could have been the poor conditionof Air Sahara’s aircraft. The other issue is a steady depletion of Air Sahara’s other big asset -- its pilots and engineers who have been steadily departing the airline.

_____________________________________________________

karatecatman · Member

PTI HC Issues Notices In PIL Against Jet Airways
June 21, 2006
The Bombay High Court issued notices to the Central Government, the Director General of Civil Aviation, the Commissioner of Police, Mumbai and the Central Bureau of Investigation to file replies within four weeks in response to a public interest litigation filed by Dr Furkan, a journalist from Delhi.

Chief Justice K. Vyas and Justice Abhay Oka issued notices following the petitioner's allegations that the Chairman of Jet Airways, Naresh Goel had links with underworld don Dawood Ibrahim and his gang. The petitioner also submitted that this could be a threat to the lives of the passengers and prayed for a CBI probe into the matter.

-- Edited by karatecatman at 16:47, 2006-06-21

karatecatman · Member

A Jet-Sahara war building up
[ Wednesday, June 21, 2006 12:09:40 amTIMES NEWS NETWORK ]

http://timesofindia.indiatimes.com/articleshow/1665100.cms
NEW DELHI: June 21, 2006 The stage seems set for a fierce battle between two titans of Indian skies. With Naresh Goyal’s Jet Airways wanting to fly out of its deal to buy Subrata Roy-promoted Air Sahara unless the transaction value is reduced, Sahara has lined up a battery of lawyers to make Jet honour the purchase agreement.

It’s learnt that Jet, which so far was holding back on the deal unless Goyal got government security clearance (as reported by TOI on Tuesday), sent a feeler to Sahara on Tuesday evening seeking a 10-20% reduction in the value of the deal, fixed earlier at Rs 2,300 crore. Sahara is believed to have immediately sent back word that any cut in the price was not acceptable, although it was willing to wait for another 15 days for Jet to conclude the deal.

The home ministry, which is to give the clearance to Goyal, is slated to meet on Wednesday evening to take up the report submitted by IB to home secretary V K Duggal on Tuesday afternoon. The report recommends a clearance to Goyal with a few riders on which the home secretary will have to take a call. If he gives the clearance, the gathering storm will probably blow over by rendering irrelevant the cause of delay cited by Jet.

The Jet-Sahara share-purchase agreement is set to expire on the midnight of June 21. If the expected security clearance doesn’t come, Jet can walk out of the deal. But that will probably trigger a war between the two corporates since Sahara maintains that Jet can very well honour the deal even if Goyal’s clearance comes later.

As things stand, Jet has paid Rs 700 crore to Sahara — Rs 120 crore as commitment fee, Rs 500 crore as advance and Rs 80 crore towards capital expenditure. While Jet seems prepared to forego the Rs 120-crore commitment fee, Sahara is determined to hold on to the entire amount if Jet reneges on the deal.

Sahara has filed a caveat in the Allahabad HC.

karatecatman · Member

IT'S OFF!

CNN-IBN, NDTV and BBC all say it is off. (June 21, 2006 9 pm)

Here is a summary and making sense of what was said.

What Sahara says:

Alok Sharma's press conference said it all. Sahara will be running Sahara on its own from tomorrow (June 22). They are very confident about this as they still have ticket stock.

Passengers still have faith in them. They have made a profit and passenger levels have increased from MArch 2006.

The main dispute is that eschrow amount which Jet cannot touch now.

Jet's Goyal has a shady reputation.

Jet is responsible for the mess.

Jet is making up stories about the balance sheet.

Will extend the deadline for 15 more days but no renegotiation.

What Jet says:

Sahara is too overpriced.

Sahara has poor maintenance standards.

Sahara's account books are a terrible mess. Huge loss between January and May 2006. Rs. 485 crore. Net loss of Rs. 26 crore. Maintenance of engines alone was too high.

Sahara's salaries for its pilots is ridiculously high.

Is making a loss of Rs. 100 crore a month

What the experts say:

Politics may have a role in this.

Jet has finally realised that it's a bad business deal.

Kingfisher will be having the last laugh.

Sahara cannot run the show from tomorrow. It has bad losses, hardly any maintenance staff and flight crew. Once Jet staff stop coming from tomorrow, they will be in bad shape as the Sahara management team has been dissolved by Jet.

Sahara cabin crew are in a mess. Low morale. When Jet took over Sahara, they found many Sahara cabin crew not upto Jet's standards.

Forget Transjet.

Naresh Goyal is creating problems about not disclosing his wealth by claiming NRI status. Tailwinds Ltd. cannot be

investigated. Intelligence Bureau has now questioned security to Goyal.

What Vijay Mallaya says:

Will look at Sahara only if it has a realistic value. Rs. 2000 crore is too much.

What Captain Gopinath says:

Jet can never hope to be a monopoly.

Went on praising Indian Airlines.

-- Edited by karatecatman at 00:12, 2006-06-22