)
Abu Dhabi-based Etihad Airways is likely to appear before the Securities and Exchange Board of India (Sebi) for a hearing on April 9, according to two sources.
The is a sequel to a showcause notice for alleged violation of the takeover code while acquiring nearly a fourth in Jet Airways. In the notice, served after Sebi’s decidion that the deal resulted in a change of control, the markets regulator had sought a reply from Etihad on why action shouldn’t be taken against it for alleged violation of securities law.
If the airline can’t convince Sebi officials on the charge, it might be directed to make an open offer to the public shareholders of Jet.
Etihad, in a written reply to Sebi earlier this month, had denied violation of the regulations. It had stated the Competition Commission of India observations, on which the Sebi notice is premised, was purely from the competition law perspective and not related to securities’ law. Based on the competition regulator’s view that Jet and Etihad were gaining ‘joint control’ in the Indian carrier, Sebi concurred there had been change in control. The takeover regulations require someone gaining joint control to make an open offer.
Sources have indicated the market regulator isn’t satisfied with Etihad’s written reply.
Currently, Naresh Goyal owns 51 per cent stake and Etihad holds 24 per cent in Jet. The other 25 per cent is with public shareholders. If Etihad is asked to make an open offer to the public shareholders, it can create complications from the perspective of foreign direct investment norms and the minimum public float requirement.
Etihad’s 24 per cent acquisition in Jet at Rs 754.7 a share was announced nearly a year before, in April 2013. Jet’s shares closed on Friday at Rs 233.5, up two per cent.
