The promoter of India?s second-largest passenger carrier Jet Airways, Naresh Goyal, has laid the groundwork for a complex transaction that will enable him to sell 24% stake in the airline to Abu Dhabi\’s Etihad Airways.

Goyal re-registered Tail Winds to make it into a corporate vehicle known as New Manx Vehicle (NMV) on February 12, which will make the restructuring or winding up of Tail Winds a smoother and quicker process. NMVs were allowed by Isle of Man as part of the country\’s new Companies Act 2006. The information was retrieved from the Isle of Man registrar of companies website by FE. Jet Airways did not comment on the matter.

Previously Tail Winds, through which Goyal owns a 79.99% stake in Jet Airways, was a normal Isle of Man Company registered under the Isle of Man Companies Act 1931-2004.

?An existing company under the Companies Act 1931-2004 can be re-registered as an NMV,? stated London Stock Exchange\’s Alternate Investment Market in a note explaining NMVs. ?This has already been done in order to assist in corporate restructuring or immediately prior to the sale of a company in order to negate the necessity to carry out a buy back or whitewashing procedure under the 1931 Act provisions.”

?Companies under the 2006 Act will be able to apply to be continued in a territory outside the Isle of Man,? said financial services company Cayman National in a note explaining NMVs. ?The Act will also offer the ability to merge or consolidate NMV companies in a simple manner.

The Wall Street Journal, quoting sources, said Goyal will initiate the transaction to change the holding structure of Jet Airways either by this week or early next week.

The report says that two options are being considered to allow the stake sale to Etihad. The first one is a multi-part transaction wherein Goyal\’s Tail Winds will transfer all shares of Jet Airways to a new company in which Goyal will have a majority stake and continue to own 51% in the airline indirectly.

Etihad will then subscribe to shares in the new entity to hold 24% stake in the airline. The Wall Street Journal did not have details about the transaction value, however, civil aviation ministry officials have stated in the past that Etihad is likely to pay $300 million for the purchase.

Another alternative that is being considered for structuring the deal, is for Goyal to transfer a part of the 80% stake held by Tail Winds directly to Etihad, The Wall Street Journal reported. Both options will end up with Goyal holding a 51% stake in Jet Airways.

The complex transaction is required because Naresh Goyal owns his stake in Jet Airways through Tail Winds, an overseas corporate body (OCB). The investment is considered to be a foreign investment as the Reserve Bank of India has ended the concept of OCBs and considers such investments to be foreign investments.

Indian laws allow only 49% foreign investment in airlines and 100% investment by non-resident Indians. Hence, before Jet and Etihad can approach the Foreign Investment Promotion Board for approval, the change in ownership structure would need to be in place.

Negotiations between Etihad and Jet Airways continue, as per a statement from the Abu Dhabi-based airline on Monday, despite television reports that the deal may fall through as Etihad seeks investment protection.

Sources said that the negotiations are on regarding a number of issues including a promise from Jet that it will pay any taxes that the Indian government may demand on the deal.

Etihad has already agreed to buy Jet\’s three pairs of landing and departure slots at London\’s Heathrow airport for $70 million. Jet will continue to use the slots on lease.

Goyal?s flightplan

* Goyal currently holds around 80% of Jet Airways through his ownership in Tail Winds, a holding company registered in the Isle of Man

* The transaction will first involve the transfer of all of Goyal\’s Tail Winds shares to a new company. Goyal will have a majority stake in the new entity, and continue to indirectly own 51% of Jet Airways, says Wall Street Journal

* Etihad will subscribe to shares in the new entity, to ultimately own an indirect 24% in the carrier