Etihad proposes to invest in Jet Airways at 49% discount

Shares of Jet Airways tumbled as much as 7.5 percent to 271.75 rupees ($3.83) in their biggest intraday drop since early December. (File/Reuters)
Updated 16 January 2019
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Etihad proposes to invest in Jet Airways at 49% discount

  • The 25-year-old Indian airline has been roiled by financial difficulties, racking up a pile of dues to pilots, lessors and vendors
  • Jet will not be able to continue funding operations beyond the next week and Etihad is willing to inject $35 million if some conditions are met

Etihad Airways has offered to pick up shares of debt-laden Indian carrier Jet Airways Ltd. at a 49 percent discount and to immediately release $35 million after certain conditions are met, CNBC-TV18 reported on Wednesday.
Shares of Jet Airways, in which Etihad already owns a 24 percent stake, tumbled as much as 7.5 percent to 271.75 rupees ($3.83) in their biggest intraday drop since early December.
The Abu Dhabi carrier has offered 150 rupees for each Jet share, CNBC-TV18 said, citing a letter from Etihad’s CEO.
Tony Douglas has written to the State Bank of India (SBI) , Jet’s biggest lender, on the restructuring plan for the Indian airline, the report added.
The 25-year-old Indian airline has been roiled by financial difficulties, racking up a pile of dues to pilots, lessors and vendors, at a time when intense pricing competition, a weak rupee and rising fuel costs are weighing on the broader airline sector in the country.
Jet will not be able to continue funding operations beyond the next week and Etihad is willing to inject $35 million if some conditions are met, the CNBC-TV18 report cited Douglas as saying in his letter.
Jet and Etihad representatives are due to meet in Mumbai with lenders, led by SBI, on Wednesday to discuss the restructuring proposal that involves Etihad increasing its stake, a source with knowledge of the matter told Reuters on condition of anonymity.
Etihad wants Jet’s founder and Chairman, 69-year-old Naresh Goyal to step down from the board and his stake to be slashed to 22 percent from 51 percent, according to CNBC-TV18.
Goyal’s penchant for control, according to people who have worked with him, has emerged as a major obstacle as the airline tries to negotiate a rescue deal, Reuters reported last month.
Etihad is also seeking an exemption from the market regulator on preference pricing and open offer guidelines to invest more for the bailout, the report added.
Under India’s capital markets regulations, Etihad is required to make an open offer to shareholders for a majority of the shares once its stake goes past 25 percent, unless it obtains a rare exemption from the market regulator.
India Ministry of Civil Aviation Secretary R N Choubey on Wednesday told reporters that the aviation ministry had not yet received an official request from Jet and Etihad for an exemption from an open offer.
Jet and Etihad were not immediately available for comment.


New Zealand to conduct own assessment of Huawei equipment risk

Updated 12 min 29 sec ago
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New Zealand to conduct own assessment of Huawei equipment risk

  • Huawei faces intense scrutiny in the West over its relationship with the Chinese government
  • Several Western countries had restricted Huawei’s access to their markets

WELLINGTON: New Zealand will independently assess the risk of using China’s Huawei Technologies in 5G networks, Prime Minister Jacinda Ardern said on Monday after a report suggested that British precautions could be used by other nations.
Huawei, the world’s biggest producer of telecoms equipment, faces intense scrutiny in the West over its relationship with the Chinese government and US-led allegations that its equipment could be used by Beijing for spying.
No evidence has been produced publicly and the firm has repeatedly denied the allegations, which have led several Western countries to restrict Huawei’s access to their markets.
The Financial Times reported on Sunday that the British government had decided it can mitigate the risks arising from the use of Huawei equipment in 5G networks. It said Britain’s conclusion would “carry great weight” with European leaders and other nations could use similar precautions.
New Zealand’s intelligence agency in November rejected an initial request from telecommunications services provider Spark to use 5G equipment provided by Huawei.
At the time, the Government Communications Security Bureau (GCSB) gave Spark options to mitigate national security concerns over the use of Huawei equipment, Ardern said on Monday.
“The ball is now in their court,” she told a weekly news conference.
Ardern said New Zealand, which is a member of the Five Eyes intelligence sharing network that includes the United Kingdom and the United States, would conduct its own assessment.
“I would expect the GCSB to apply with our legislation and our own security assessments. It is fair to say Five Eyes, of course, share information but we make our own independent decisions,” she said.
Huawei New Zealand did not immediately respond to a request for comment. Spark said it was in discussions with GCSB officials.
“We are working through what possible mitigations we might be able to provide to address the concerns raised by the GCSB and have not yet made any decision on whether or when we should submit a revised proposal to GCSB,” Spark spokesman Andrew Pirie said in an emailed statement.
The Huawei decision, along with the government’s tougher stance on China’s growing influence in the Pacific, has some politicians and foreign policy analysts worried about potential strained ties with a key trading partner.
Ardern’s planned first visit to Beijing has faced scheduling issues, and China last week postponed a major tourism campaign in New Zealand days before its launch.
Ardern said her government’s relationship with China was strong despite some complex issues.
“Visits are not a measure of the health of a relationship they are only one small part of it,” she said, adding that trade and tourism ties remained strong.