SpiceJet, Modi call truce; to sell 11.5 mn shares

New Delhi: SpiceJet Ltd, India’s third largest low-cost airline by passengers flown, plans to sell around 11.5 million shares, equivalent to about 5% of its equity capital, on the stock markets following a settlement with the SK Modi business group, a majority owner of an earlier avatar of the carrier, ModiLuft, according to a company executive.
The money raised from the share sale, under an order of the Delhi high court in a case related to issue of equity to the Modi group in ModiLuft without payment of cash, will first be deposited in a court-mandated account. The court will then decide on how the proceeds of the sale—around Rs35 crore given that SpiceJet’s current market capitalization is approximately Rs700 crore—will be appropriated between SpiceJet and the Modi group.
“We cannot square up the transaction in the books (until) we sell those shares, get it into to the court’s account... If anything has to (be) exempted, it is...and then we receive whatever is there,” a senior executive at SpiceJet said in a recent interview. He cannot be named because he is not authorized to speak with the media.
The airline’s chief financial officer Parthasarthy Basu said SpiceJet had “not planned” the share sale out yet.
Asked if this could be the best route to recover the disputed money relating to issue of equity, he said, “Probably, yes.”
25/06/08 Tarun Shukla/Livemont

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Categories: SpiceJet Jun 2008