In a move that might help cash-strapped budget passenger carrier SpiceJet ride out the financial turbulence currently rocking it, the airline’s promoter Kalanithi Maran will off-load his stake in the company to new promoter Ajay Singh after regulatory clearances.
A regulatory filing was made in this regard at the Bombay Stock Exchange (BSE) Thursday. The filing said that the board of directors have taken on record the proposal of promoter Kalanithi Maran to transfer the ownership, management and control of the company to Ajay Singh.
According to the filing, the proposal will be pursuant to a ‘scheme of reconstruction and revival for the takeover of ownership, management and control of SpiceJet’ to be filed before the competent authorities.
The filing further said that the board has further directed the company to implement all necessary steps to make the appropriate application before the ministry of civil aviation for seeking approval of the proposal. However, the filing did not disclose any financial details of Thursday’s development.
This is Singh’s second innings with the airlines which he co-founded with Bhupendra Kansagra in 2005. However, he had sold his stake along with Kansagra and assets buyout specialist Wilbur Ross in 2010 to Sun Group’s Kalanithi Maran. Currently, Maran together with his KAL Airways hold 53.5 percent stake in SpiceJet, while Singh has a 4.5 percent stake. Maran acquired SpiceJet for close to Rs.750 crore.
In December Maran made it clear that no fresh bail-out package could be made for the airline in which nearly $400 million or Rs.2,500 crore has been invested in since 2010. Meanwhile, Singh’s move was along expected lines as he, along with the airline’s management, had met civil aviation ministry officials several times to evince his interest in investing back in the budget carrier.
The airline is hopeful that with the new promoter at the helm, fresh funds will be infused to strengthen its operations. The company had also made it apparent to the ministry that new promoter Singh — with his revival plan — will help it tide over the current financial turmoil.
The airline is expected to submit a new investment plan to the market regulator — Securities and Exchange Board of India (SEBI) — to seek an exemption for the transaction which might trigger an open offer.
Under current regulations, any transaction of 25 percent or more in a listed company automatically triggers an open offer. It is understood that the move to consult SEBI was in the light of a similar deal last year between Jet Airways and Abu Dhabi-based Etihad Airways encountering regulatory hurdles. (IANS)