Jet Air, Etihad in talks for stake sale; 24% could change hands
Jet and Etihad already have a code-sharing agreement, and a tie-up could see Jet emerging as more formidable rival to Air India, while Etihad would be able to offer greater competition to Dubai-based Emirates, which carries a big slice of traffic between India and the Middle East.
Jet losses have eroded its shareholdersí equity and the net debt as at the end of September 2012 was close to Rs 8,900 crore for the standalone entity; the groupís balance sheet debt is approximately Rs 12,000 crore. The groupís annualised interest expenses based on first half of 2012-13 are estimated at Rs 1,200 crore. Analysts point out the group is heavily leveraged and that the interest bill is rising due to the rising risk aversion of banks towards the aviation sector. Moreover, the depreciating rupee has resulted in a rise in interest costs on dollar-denominated loans. On a rough reckoning, an equity infusion of Rs 1,600 crore will lower Jetís FY14E net debt to Ebitda from 6 times to 5 times and increase the interest coverage ratio from 1.8 times to 2.1 times, analysts estimate.
A civil aviation ministry official had said on Wednesday that for the consummation of the deal, Jet would have to restructure its shareholding pattern.
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