Maran pumps R100 crore into SpiceJet

The SpiceJet board on Friday approved the issue of shares and said Maran will subscribe the shares.

Written by Fe Bureau | Mumbai | Published: March 3, 2012 1:44 am

Kalanithi Maran,the owner of low-cost passenger carrier SpiceJet,will hike his stake to 16% from 8% after he subscribes to 42.9 million preferential equity shares for roughly R100 crore,siganalling his confidence in the loss-making airline and helping it purchase new planes to fly between smaller cities.

The SpiceJet board on Friday approved the issue of shares and said Maran will subscribe the shares according to market regulator Securities Exchange Board of India guidelines on such transactions. The issue will be completed after Sebi approves it.

Sebi rule says the issuer has buy such shares at two weeks average trading price or 26 week average or whichever is higher.

On Friday,SpiceJet’s shares closed 0.48% lower to end at R20.70 on BSE. At Friday’s closing price,42.9 million shares are valued at R88.8 crore.

“With this the holding of promoters will increase to 48.6%,” said SpiceJet chief executive Neil Raymond Mills. He did not elaborate on whether the allotment will be at a premium to the market price.

Maran,the chairman of the airline,had been increrasing stake in the carrier after he purchased a majority control in October,2011. He bought 35.9 million preferential equity shares for R130 crore and hiked his stake by 8% at a 65% premium to the then traded price in October 2011.

SpicJet too had a loss of R39.6 crore in the fiscal third quarter,the lowest loss among peers.

The equity infusion from Maran comes at a time when Indian passenger carriers are struggling to wipe out losses as they pay more for fuel,higher interest costs and steep airport charges. Rivals Kingfisher airline has been seeking a life support from banks to stay afloat as heavy debt and losses stifle its operations.

“This equity infusion will infuse confidence in the market for SpiceJet,” said Rashesh Shah,an equities analyst with Mumbai-based brokerage ICICI Securities. “It will also ease the concerns raised by auditors about the net worth of the company in the fiscal third quarter results.”

The airline purchased 15 turbo-propeller planes from Bombardier for R2,250 crore.

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