The valuation is central to making a success out of the deal, and injecting liquidity into the struggling airline.
Naresh Goyal may be looking for the 'right price' to exit, at least partially, from Jet Airways, but he may not get more than Rs 250 a share, say industry executives.
The valuation is central to making a success out of the deal, and injecting liquidity into the struggling airline. Facing cash crunch, Jet has grounded aircraft, delayed salary payments, and faces a steep debt repayment schedule.
The airline's lenders, led by State Bank of India, had last week met senior executives of Jet and Etihad Airways. The Abu Dhabi-based airline owns 24 percent stake in Jet, and is the most likely to bring in more funds.
But Etihad has made an offer of Rs 150 a share, a marked climb down from the Rs 754.74 a share it had paid to Jet Airways in 2013 to get a 24 percent stake.
Jet's stock is now hovering around Rs 270 a share, and that doesn't give much space for Goyal to bargain. The airline at present has a market cap of Rs 3,112 crore. On the other hand, it has debts of over Rs 8,000 crore.
"Goyal is bargaining hard. But it is unlikely that he will get more than Rs 250 a share," said a senior executive from an airline.
While the valuation is high on the conditions list that Goyal has put, the Jet Airways founder is also seeking a board position for his family.
Sources told Moneycontrol that his son Nivaan Goyal could get a board position. Nivaan had joined Jet Airways in 2011 as a trainee. Anita Goyal, Naresh Goyal's wife, is a director and part of the airline's board.
Goyal also wants to retain a considerable part of his present 51 percent stake, but may not want to dilute his shareholding below 25 percent.
Etihad, on the other hand, wants an exemption from giving an open offer, which will be triggered if it invests more in Jet Airways, taking its stake beyond 25 percent. According to regulations, any investment that goes beyond 25 percent of the total shareholding, triggers an open offer.The banks want both the sides to finalise a deal as soon possible, as Jet Airways has already defaulted on debt repayments. The airline needs to make another payment of Rs 1,700 crore by March.