The Airline initially toyed with pumping in more funds in lieu of Jet owner Naresh Goyal relinquishing his controlling authority and reducing his equity from 51% to less than 20%. The airline backed out at the last minute, even after Naresh Goyal reduced his board seats and equity in favour of financial creditors.
Now that the Airline ownership likely to be shifted to lenders led by SBI and other PSB’s , government cannot afford to sink the major airline in an election season, Etihad is playing hard ball with the new owners of the airline, Public Sector banks by offering to sell its entire stake of 24% at a rate fixed by the airline@ Rs.150 a share. This is in contrast to the Naresh Goyal’s haircut of more than 30% of equity in favour of Creditors. in the same ratio, Etihad’s 24% of equity should have been reduced to less than 10% in the proposed scheme of financial solution to the airline.
Industry insiders feel that, Etihad is offering to sell its entire equity to escape the haircut, as Goyal did. Since the government and lending banks, do not want to sink the large airline in the Election season, Etihad may be trying to encash its entire equity stake, in the midst of government’s precarious situation of keeping the airline afloat, in the election season and the peak summer travel season.
sensing that, it may find its way through, Etihad is playing its cards very close and not yielding to the negotiation pressure of financial creditors, who have all but taken control of the airline. This development may throw a spanner in the plans of the lenders, who wish to relinquish their stake after the new owner takes control at a future date.
for the process to consummate in a fair manner, Lenders need to reign in Etihad and make it agree for equity cut on the lines of Naresh goyal. if that did not happen, Goyal may well knock the doors of the court for equal treatment.