16.1.15

Ajay Singh boards SpiceJet again


The ownership and control of SpiceJet will go back to co-founder Ajay Singh with current promoter Kalanithi Maran all set to exit the low cost carrier. Ajay Singh, along with a consortium of investors led by a unit of US-based JP Morgan Chase, is likely to infuse a `significant' sum into the LCC which requires almost Rs.1,500 crore immediately to survive.
In a BSE filing on Thursday, SpiceJet said it would “transfer the ownership, management and control of the company to Singh pursuant to a scheme of reconstruction and revival“ being filed with the aviation ministry . Maran's Sun Group, along with the billionaire personally , holds 58.46% stake in the LCC. It will transfer the stake to the Singh-led consortium and remain an investor with holding of warrants (convertible into 10% stake) in the carrier. SpiceJet promoter Kalanithi Maran is set to hand over control of the troubled low-cost carrier to its co-founder Ajay Singh. While SpiceJet did not disclose financial details of the deal, Maran's stake is worth just over Rs.500 crore. But the airline has dues of way over Rs.700 crore which the Sun Group has refused to pay . The Sun Group may have to infuse about Rs.80 crore into the airline when the 10% warrants are converted.
Aviation ministry sources said the Singh-led consortium would pump Rs.1,500 crore into the LCC, making it the first crisis-ridden airline in recent years to come back from the brink. Others like Vijay Mallya's Kingfisher, Paramount and MDLR have not flown again after running out of cash.
SpiceJet has seen almost half of its Boeing 737s being repossessed by leasors due to non-payment and has cut over 100 daily flights since mid-November. The airline hopes to get a new lease of life now.
Ajay Singh is ready for more funding if the proposed infusion triggers an open offer, under which the new investors will have to acquire another 26% stake worth about Rs.250 crore from public shareholders.
The LCC's current COO Sanjiv Kapoor submitted the ownership transfer plan to the aviation ministry. The airline has 5,000 employees and the downsizing may see significant layoffs in the company going forward.
Ajay Singh, a BJP strongman who coined the term “ab ki baar, Modi sarkar“, had started SpiceJet along with UK-based Bhulo Kansagra in 2005. He sold his stake to Maran in 2010 and at that time the LCC had cash reserves of Rs.800 crore.Being completely new to aviation, Maran's Sun Group led the airline to financial disasters.
In the last quarter ended September 30, 2014, SpiceJet reported Rs.310-crore loss. In financial year 2013-14, it lost over Rs.1,000 crore--the third consecutive year of loss since fiscal 2011-12. Shares of SpiceJet closed 3% higher at Rs 18.65 on the BSE, valuing the company at about Rs.999 crore.

No comments: