Mumbai: Jet Airways and Etihad have reworked their shareholder agreement following stiff opposition from regulators and the government regarding some provisions that appeared to give minority partner Etihad substantial say in the running of the airline. Three critical clauses in the shareholder agreement have been watered down to pass muster with markets regulator Securities and Exchange Board of India (Sebi) and the Foreign Investment Promotion Board (FIPB), which deferred approval to the investment last month.
The revisions may make it easier for the partners to argue their case, and possibly secure approval. It would also help in deflecting attention from the controversy surrounding the deal, though another round of governmental scrutiny into the changes cannot be ruled out.
Jet and Etihad struck a landmark agreement in April this year under which the Middle-Eastern carrier agreed to buy 24 per cent of Jet for about $600 million. Etihad paid a premium of 34 per cent over the market price though it was not getting control, leaving many wondering whether there was a quid pro quo in the form of additional powers in the shareholder agreement. Sebi was the first government agency to question the deal, especially the clauses in the agreement giving Etihad the power to approve a number of transactions.
16/07/13 M Padmakshan/Economic Times
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The revisions may make it easier for the partners to argue their case, and possibly secure approval. It would also help in deflecting attention from the controversy surrounding the deal, though another round of governmental scrutiny into the changes cannot be ruled out.
Jet and Etihad struck a landmark agreement in April this year under which the Middle-Eastern carrier agreed to buy 24 per cent of Jet for about $600 million. Etihad paid a premium of 34 per cent over the market price though it was not getting control, leaving many wondering whether there was a quid pro quo in the form of additional powers in the shareholder agreement. Sebi was the first government agency to question the deal, especially the clauses in the agreement giving Etihad the power to approve a number of transactions.
16/07/13 M Padmakshan/Economic Times
