SpiceJet,Maran differ over price

Talks between Sun TV promoter Kalanithi Maran and promoters of low-cost carrier SpiceJet for a possible stake sale have hit a wall over valuation. Sources close to the development said though Maran is keen to acquire the majority 51% stake in SpiceJet,hes willing to pay between Rs 39 and Rs 41 per share,which the latter finds as below its ruling share price. On Wednesday,SpiceJet shares closed on the BSE at Rs 58,according to which the companys valuation works out to around Rs 1,400 crore. If the two sides resolve the pricing differences,a deal could be announced in the next fortnight.

Talks between Sun TV promoter Kalanithi Maran and promoters of low-cost carrier SpiceJet for a possible stake sale have hit a wall over valuation.

Sources close to the development said though Maran is keen to acquire the majority 51% stake in SpiceJet,hes willing to pay between Rs 39 and Rs 41 per share,which the latter finds as below its ruling share price. On Wednesday,SpiceJet shares closed on the BSE at Rs 58,according to which the companys valuation works out to around Rs 1,400 crore. If the two sides resolve the pricing differences,a deal could be announced in the next fortnight.

According to sources associated with the developments,Maran wants to pick up a controlling stake in the airline below the ruling share price,as he feels the current market price is too high and not in sync with the fundamentals of the company. For instance,he feels that SpiceJet is valued higher than other airline firms like Kingfisher whose fleet size is much larger.

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Maran is reported to be banking on the stake held by US billionaire and private equity investor Wilbur Ross in the company. Ross has invested $68 million in SpiceJet in July 2008 through foreign currency convertible bonds and has the choice to either convert them or redeem them as bondsa choice that he has to exercise by this December.

But if Ross converts them,his stake will go up to 31%. Further,he would also be then required to come up with the mandatory 20% open offer. Sources said Ross is not keen to convert the bonds and is looking to sell his stake.

As the strike price for the bond conversion is Rs 35 per share,Maran has the option to use it as a bargaining tool to whittle down the price of the deal. SpiceJet,too,it is reported,is not keen on Ross converting the bonds as it would entail an outgo of around Rs 450 crore for it.

When contacted,Samyukth Sridharan,chief commercial officer,SpiceJet,said,As a policy,we do not comment on market rumours and speculations. Maran and Ross could not be contacted for their comments.

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Kenya-based Kansagra family is the promoter of SpiceJet with a 13% stake,while director Ajay Singh holds 5%. The rest is between the public and institutions.

Dubai-based investment firm Istithmar sold its 13% stake in the airline for Rs 160 crore in February.

SpiceJet,which has a market share of around 12%,recently got the approval to fly international.

The company is also expanding its fleet size of 20 Boeing aircraft by adding nine more by 2012.

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