Thursday, July 13, 2017

SpiceJet in a quandary as former promoter claims his 'dues'

The peculiar purchase of SpiceJet three years ago is creating fresh ruckus. Although Ajay Singh, current promoter of SpiceJet, boasts about turning around the loss-making airline that he had acquired for Rs 2, his bitter fight with former SpiceJet promoter Kalanithi Maran (of Sun Group) continues to simmer.
When Singh took over SpiceJet in 2014, the carrier was in a bad shape. It did not have enough cash to pay the lessors, oil companies and employees. When Maran exited the company by selling his 58.46 per cent stake, he gave around Rs 350 crore to the carrier to pay some of the dues. In return, a contract - a sales and purchase agreement (SPA) - was signed between Singh and Maran that has been a bone of contention. According to the terms of the contract, Maran was entitled to get 18.91 crore warrants worth Rs 309 crore and non-convertible cumulative redeemable preferential shares worth Rs 370 crore.
SpiceJet says it could not issue warrants to Maran as objections were raised by the Bombay Stock Exchange on SPA terms. Subsequently, Maran approached Delhi High Court, which ruled in his favour asking SpiceJet to deposit Rs 579 crore in the form of bank guarantees and cash deposits by August 31. SpiceJet says it is ready to issue the warrants but there are regulatory hurdles. The Marans, on the other hand, have raised doubts about Singh's intent to pay back the agreed dues. Both parties now expect resolution through arbitration that kicked off late last year.
13/07/17 Manu Kaushik/Business Today
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