Billionaire Ross to Invest $80 Million in SpiceJet

U.S. billionaire investor Wilbur Ross, who made his fortune taking over bankrupt steel, coal and textile companies, will invest 3.45 billion rupees ($80 million) in SpiceJet Ltd., his first investment in an Indian airline.
WL Ross & Co. will make the investment and Ross will join SpiceJet's board, according to a statement by India's second- largest budget airline. Ross will buy foreign currency convertible bonds held by Istithmar PJSC and Goldman Sachs Group Inc., Kishore Gupta, a director of the New Delhi-based airline, said in a phone interview.
SpiceJet's shares have declined 57 percent this year as record fuel prices drain funds needed to pay for new Boeing Co. planes the airline has ordered. Purchasing a stake now may enable Ross to earn a profit as travel demand rises in the world's second-fastest growing major aviation market and mergers reduce competition.
SpiceJet surged as much as 16 percent after the deal was announced today. It changed hands at 29.55 rupees, or 5.7 percent higher than yesterday's close, at 11:55 a.m. in Mumbai.
``We believe in the long-term validity of the low-cost airline model in India, and that fuel prices eventually will stabilize,'' Ross said in the statement.
Ross will buy foreign-currency convertible bonds, or FCCBs, owned by Dubai-based Istithmar and Goldman Sachs, Gupta said. The purchase will enable SpiceJet to use funds from the account it couldn't utilize until now, he said.
15/07/08 Vipin V. Nair/Bloomberg

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Categories: Foreign Jul 2008, New Jul 2008, SpiceJet Jul 2008