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Jet Airways clears security

india Updated: Jun 21, 2006 01:23 IST
ARUN Kumar

Crucial MHA meet today

Sahara rules out deal review

THE ACQUISITION of Air Sahara by Jet Airways now depends on the government. On whether Jet gets the security clearance for the deal. And indications are that it will.

The Ministry of Home Affairs (MHA) has called a high-level meeting, to be chaired by secretary V.K. Duggal, on Wednesday to thrash out the security concerns being raised by different government departments on Jet chief Goyal's antecedents, as also the proposed Rs 2,300 crore deal.

Sources in the ministry confirmed to HT about the meeting. "We'll take a view, we ought to. It is a serious issue," said an official. Sources said the Foreign Ministry has forwarded a complaint, received from the US Department of Transportation in the first week of June, to the Home Ministry, expressing concern over the deal particularly in the backdrop of Air Sahara having permission to fly to the US.

But sources said there was a possibility that the Home Ministry will give security clearance to the deal on Wednesday, the day of expiry of the share purchase agreement.

And even if the government assures both the parties -- Jet and Sahara -- that it will take a final decision shortly, they might extend the escrow account (which expires in two days) by a month or two.

In March, the escrow account deadline was extended by three months and Jet had paid a refundable advance of Rs 500 crore to keep the deal on.

Jet Airways said it was still awaiting all regulatory approvals and fulfillment of all conditions required for the deal. "The deal is on and if there are problems we would look into these," said an official. Jet's top officials -- including Gaurang Shetty, designated team leader for the merger process -- meanwhile have flown to London to update Goyal about the process.

Sources said there were enough indications that Jet wants to wriggle out of the deal -- especially after its due diligence revealed Sahara's losses. But fearing legal challenges from Sahara, it may be using the security clearance issue. Goyal had even shot off a letter to Sahara, expressing unhappiness and concern over the delays and turn of events. Also, the price may be hampering the deal. Jet believes the price should be Rs 1,000 crore and not Rs 2,300 crore due to the gaping hole in Air Sahara's balance sheet. This is apparently non-negotiable for Sahara boss Subrata Roy.