New Delhi: With the reigns of the budget airline SpiceJet Ltd back in the hands of original owner Ajay Singh, it is poised to take flight with his shrewd strategy being put in place.
Marans will infuse Rs 375 crore into the budget carrier in lieu of 'non convertible preference shares' to be allotted to them despite them offloading their entire existing equity stake in favour of Singh. Marans will get an allotment of 37.5 lakh non-convertible preference shares at Rs 1,000 per share. The board has also decided to raise Rs 1,500 crore through issuance of fresh securities.
Bangalore-based aviation analysts Pankaj Pandit says the board's decision to raise Rs 1,500 crore through fresh equity issue will reduce the cost of capital and improve the debt-equity ratio of the troubled airline.
"If he (Singh) raises capital through qualified institutional placement (QIP), the cost of capital will be practically zero. It will reduce the airline's cost of capital by improving debt-equity ratio. He may also convert a lot debt into equity. That way, the airline has better holding power than now," he said.
31/05/15 Praveena Sharma/Daily News & Analysis
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Marans will infuse Rs 375 crore into the budget carrier in lieu of 'non convertible preference shares' to be allotted to them despite them offloading their entire existing equity stake in favour of Singh. Marans will get an allotment of 37.5 lakh non-convertible preference shares at Rs 1,000 per share. The board has also decided to raise Rs 1,500 crore through issuance of fresh securities.
Bangalore-based aviation analysts Pankaj Pandit says the board's decision to raise Rs 1,500 crore through fresh equity issue will reduce the cost of capital and improve the debt-equity ratio of the troubled airline.
"If he (Singh) raises capital through qualified institutional placement (QIP), the cost of capital will be practically zero. It will reduce the airline's cost of capital by improving debt-equity ratio. He may also convert a lot debt into equity. That way, the airline has better holding power than now," he said.
31/05/15 Praveena Sharma/Daily News & Analysis
