SpiceJet may shun Mallya for Ross

It looks like SpiceJet is all set to spurn billionaire Vijay Mallya's bid to pick up a stake and accept the proposal of American turnaround investor Wilbur L Ross Jr to bail the budget airline out of the current crisis.
According to sources, Mallya's deal, which was communicated to the SpiceJet directors three days back, has not enthused the airline management.
"The airline management is planning to turn it down. There are differences on the valuations. Also, the stake that is being sold is very small (13% of London-based promoter Bhupendra Kansagras)," said the source.
It has been reported that Mallya and the low-cost airline were looking at a share-swap ratio of 1:3. This means that three shares of SpiceJet would be swapped for one share of the merged (Kingfisher and SpiceJet) entity.
The source also said that the management did not trust Mallya on retaining SpiceJet's brand and business model after the sale.
"Going by what he has done with G R Gopinath's Deccan (budget airline bought by Mallya last year), the SpiceJet management does not want to put the airline's brand and business model at stake. He (Mallya) is also very interfering," said the source.
With talks between the two airlines having gone awry, SpiceJet is now said to have begun discussions with WL Ross & Co chairman and CEO Wilbur Ross, who has evinced interest in funding it.
Ross is an American investor with a reputation of turning around sick companies in sectors like steel, coal, telecommunication, foreign investment and textiles. He is said to be a specialist in leveraged buyouts.
"Wilbur Ross is ready to put in Rs 200 crore. This money, along with SpiceJet's internal resources, will meet the airline's expenses for six months," said the source.
05/07/08 Praveena Sharma/DNA MONEY/Sify

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Categories: SpiceJet Jul 2008