Jet-Sahara deal reaches final agreement: Report

Mumbai / New Delhi, Apr 10: There is nothing official about it as yet but Jet Airways is understood to have struck a deal to revive the takeover of Air Sahara, nearly nine months after calling it off.

The agreement, which was reportedly reached during the final arbitration hearings in Mumbai, valued the deal at Rs 1,850 crore.

The amount is less than Rs 350 crore which Jet had offered to pay in January 2006.

Aviation experts were abuzz today that Jet is offering less amount to account for creditors' dues. Jet has already paid Rs 680 crore to Sahara -- Rs 180 crore for reviving the airline and Rs 500 crore as bank guarantee.

When contacted, a Sahara spokesperson declined to comment, saying the talks were on through the arbitration panel. Jet's chairman Naresh Goyal, emerging from the arbitration hearing, also declined to comment, saying the matter is sub-judice.

Jet's counsel told reporters that the arbitration order is expected tomorrow. He did not divulge further details.

It is a tricky situation for Jet, which has a wide range of network in India and it is looking for expansion in a major way as far as the global operations are concerned. Experts say that it would have been better for both Jet and Air Sahara if they had merged before one year.

But at present, there is lot of competition and so it will be really tough going. A proposed merger of government-owned Air India and Indian is also expected to be complete shortly.

Jet announced in March 2006 that its plans to buy Sahara were on track. After the deal fell through, following Jet's failure to get regulatory clearances by the deadline of June 21, 2006, both parties moved court and the matter was directed for arbitration. A week after the proposed merger between Jet and Sahara fell through -- a merger that was touted as the biggest aviation deal in India -- the legal battle lines were drawn and later the deal capped a series of developments.

After scrapping of the acquisition deal, both parties moved to court to stop each other from operating the escrow account opened for the deal.

Sahara filed a caveat in the Supreme Court, a formal notice requesting the postponement of a proceeding until the filer is heard. The caveat was filed after media reported that Jet had stated that the decision not to salvage the 500 million dollar merger deal was purely on commercial considerations and that it was moving the Supreme Court for transfer of litigation in different courts at Lucknow and Mumbai.

Jet also filed a petition under section 9 in the Bombay High Court. Till the time of the verdict, Sahara wanted the escrow account of Rs 1,500 crore with ICICI Bank frozen.

Afterwards, Sahara threatened to sue Jet and sought damages to the tune of Rs 2,000 crore from the airline for illegally backing out from the deal. The government meanwhile said that the Jet-Sahara deal did not fail due to procedural delays.

Aviation experts say the two companies have been holding informal talks to reach a settlement. Both will command a market share of almost 40 per cent in the country's fast-expanding domestic market.

UNI