Jet, Sahara work on fine print of deal

Executives of Jet Airways and Air Sahara spent the day thrashing out the details of the agreement to settle their long-standing dispute.

Executives of Jet Airways and Air Sahara, assisted by their legal and financial aides, spent the day thrashing out the details of the agreement to settle their long-standing dispute. Jet will buy Sahara for an enterprise value of 2,050 crore, of which Rs 950 crore will be paid in cash.

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"Both parties have reached a commercial agreement, and are now sorting out the final details of the agreement. A draft will be presented to the arbitration panel tomorrow for a final decision," Jet Airways counsel Harish Salve told reporters in Mumbai. "The financial part is over, we are working on the legal part," said Rajiv Memani of Ernst & Young, which is advising Sahara on the deal.

Earlier in the day, a draft copy of the agreement was given to both the airlines, based on which they were likely to hold discussions later in the evening. A final copy of the agreement will be presented before the arbitration tribunal headed by British judge Lord Stein on Thursday. Jet Airways is likely to announce the deal at a press conference in Mumbai soon after.

"It is a big deal, there are lot of changes in the original share purchase agreement, which have to be reworded and finalised by tonight," Salve added. Jet is likely to buy Air Sahara for Rs 1,450 crore in cash, of which it has already paid Rs 500 crore in lieu of pledging the promoter’s shares in Air Sahara. Jet has agreed to pay Rs 400 crore upfront, and the remaining over a couple of years.

The deal values Air Sahara at Rs 2,050 crore but excludes Rs 550 crore of liabilities, as well as the value of Sahara’s helicopter business and its immovable assets, said sources close to the deal.

Jet, which has about a third of India's fast-expanding domestic market and also flies to overseas destinations, struck a deal in January 2006 to buy Air Sahara from the Sahara group.

After the deal failed to get regulatory approvals, Jet said last June it had decided not to pursue the acquisition for commercial reasons and in the interest of its shareholders.