After the preferential allotment of shares to Etihad Airways, the latter would have three members on the Jet Airways board.
They are James Hogan (chief executive), James Rigney (chief financial officer) and Harsh Mohan (vice-president, internal audit and risk management). Jet Airways would have four directors on the board; there would be seven independent directors as well.
The composition of the board is in contrast to that of AirAsia. Sources say the joint venture company is likely to have at least six members on its board -two nominees each from AirAsia and Tata Sons and one representative from Telstra Tradeplace.
Jet Airways' promoter Tailwinds Limited is said to be looking at an exemption from the Securities and Exchange Board of India (Sebi) for divesting equity shares of the company to comply with the 25 per cent public shareholding norm. In an application to the Foreign Investment Promotion Board (FIPB), Etihad Airways said, "Tailwinds Limited, an existing promoter of the company (Jet Airways), will seek an exemption from Sebi for divesting equity shares of the company in the manner approved by Sebi to comply with the minimum 25 per cent public floating requirement prior to the proposed preferential allotment of equity shares to the investor (Etihad Airways)."
If Sebi doesn't grant an exemption, Tailwinds would sell five per cent stake through an offer for sale, enabling the airline to issue preferential shares to Etihad. The remaining promoter shareholding would be transferred from Tailwinds to promoter Naresh Goyal.
A Jet Airways source, however, said the airline didn't seek an exemption from Sebi for diluting promoter shareholding. "Why would we seek an exemption in the 12-week cool-off period if the promoters do not wish to come up with an offer for sale?" the source asked. Sebi has relaxed the 12-week cool-off period requirement to enable Jet to carry out the Offer for Sale.
According to an alliance agreement last month, Jet would issue 2.76 million shares to sell 24 per cent stake to Etihad at Rs 754.73 a share. Etihad's total equity in the airline would be Rs 2,058 crore.
The equity infusion would help Jet retire a part of its Rs 11,000-crore debt. Overall, Etihad is committing investment of $600 million (Rs 3,255 crore), which includes the equity investment, purchase of slots at London's Heathrow airport and investment in the frequent flyer programme. Etihad is also helping Jet source a $150-million (about Rs 813-crore) loan through its bankers. The loan would involve interest of about three per cent, according to the prevailing funding norms, and this would help the airline refinance and retire high-cost debt. Jet has loans of about $800 million (Rs 4,340 crore), at an interest of about 12 per cent.
CCI looking into the deal
The Competition Commission of India (CCI) today said it was examining the Rs 2,000 crore proposed deal between Jet and Etihad. CCI has received an application seeking approval for the proposed transaction.