Maran’s entry into SpiceJet will strengthen the carrier: analysts

New Delhi: The likely entry of Sun TV Network Ltd founder Kalanithi Maran as a strategic investor in SpiceJet Ltd could be a potential game changer for the low-cost airline and help sharpen its focus on expansion, analysts say.
Maran is in talks with WL Ross and Co. Llc to buy the latter’s stake in SpiceJet, an executive at the airline confirmed on Thursday on condition of anonymity. Maran, through his advisers, is in talks with the firm to buy WL Ross’ entire 30% stake, the Business Standard reported on Thursday.
“Officials have been visiting for due diligence,” said the airline executive. Separately, the Gurgaon-based, low-cost carrier has been looking to raise $50-75 million (Rs225-338 crore) through a preferential placement of shares, the same official said.
If it happens, Maran’s purchase of the stake would bring to SpiceJet a strategic investor who could help guide the airline through rough times for an airline industry that’s hurting from intense competition and high costs. India’s three biggest airlines, Jet Airways (India) Ltd, Kingfisher Airlines Ltd and National Aviation Co. of India Ltd-run Air India, are laden with combined debt of Rs36,000 crore and are all looking to raise funds.
WL Ross chief Wilbur Ross said that offers to invest in SpiceJet were under consideration. “Various parties have expressed interest in either a passive or active participation in SpiceJet and we are evaluating their proposals,” Ross said in an email.
Ross holds $68 million of bonds that can convert into about 125 million shares with a conversion price of Rs25. WL Ross agreed to buy the bonds in July 2008. Ross’ bonds, due by December, can be converted into shares worth around Rs730 crore based on Wednesday’s closing price and figures from SpiceJet.
01/04/10 Tarun Shukla and Bloomberg/Live Mint

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Categories: spicejet Apr 2010