Acquiring shares in India’s IndiGo Airlines likely to ease
IndiGo Airlines (6E, Delhi Int’l) parent InterGlobe Aviation has summoned its shareholders for an extraordinary general meeting on December 30 to vote on a proposal to amend the Articles of Association (AOAs) of the company by removing share transfer restrictions on them, it said in a stock exchange filing on December 6.
Feuding co-founders Rakesh Gangwal and Rahul Bhatia, who between them hold 74.44% of the company, both requisitioned the meeting having been directed to do so in a London Court of International Arbitration ruling in September ordering the removal of the AOAs that restrict the transfer of shares.
Bhatia and his company InterGlobe Enterprises filed for the international arbitration, and the award instructed Gangwal to pay him USD50,000, but it also allowed Gangwal’s counterclaim seeking removal of the transfer restrictions. The meeting will be the culmination of a legal battle that erupted in July 2019 when Gangwal alleged corporate governance lapses at the company.
Gangwal approached the High Court of Delhi in October claiming that Bhatia had been ignoring his efforts to implement the London arbitral ruling, but the Indian court refused to intervene.
According to the latest disclosure, the share transfer restrictions include right of first refusal, tag-along rights, and rules regarding off-market transfers. The articles also restrict the two shareholders from selling shares to a competitor or effecting a change in control. Any acquisition of shares by either party triggering an open offer would also be banned.
These articles and restrictions had been due to expire in November 2019, four years after the company listed on the stock exchanges, but a special resolution Gangwal called to remove them failed as Bhatia blocked it. On December 30, however, both businessmen have requisitioned the EGM and so the resolution to amend the articles is likely to pass. After that, both will be free to sell their shares to third parties.
Low-cost carrier IndiGo Airlines is by far the largest airline in India by passengers carried and fleet size, with a 57% domestic market share. According to the ch-aviation fleets advanced module, it currently operates a fleet of 278 aircraft consisting of 135 A320-200Ns (and another 199 to be delivered), sixty-two A320-200s, forty-seven A321-200NXs (and another 349 to be delivered), and thirty-four ATR72-600s (with 19 more to be delivered).