The Competition Commission of India on Thursday cleared Ajay Singh’s proposal to acquire a majority stake in cash-strapped SpiceJet, paving the way for a change in the ownership of the low-cost carrier. Singh, who is in the process of buying out Dayanidhi Maran’s 58% stake in the airline, said the first tranche of R400 crore would be infused into the company on Monday or latest by Tuesday.
Speaking to a television channel, Singh, the original promoter of the airline, said a second tranche would come in by end March. A total of R1,500 crore is expected to be brought in by the promoters and a couple of private equity funds. Confirming that the CCI had given him the go-ahead, Singh said the transfer of shares would take place in a day or two. On whether the new promoters would need to make an open offer to minority shareholders, Singh said his legal counsel was of the view that an open offer would not be necessary. The civil aviation ministry is understood to have agreed to a scheme of arrangement by which the new promoters do not need to make an open offer.
The SpiceJet board had in late January approved the transfer of the Maran family’s entire 58.46% stake to Singh, while saying the company would raise R1,500 crore via issuance of fresh securities.
Besides, the Marans were to also infuse Rs 375 crore into the budget carrier in lieu of ‘non convertible preference shares’ to be allotted to them despite their offloading their entire existing equity stake in favour of Singh and resigning from the board.
On Wednesday, aviation ministry sources had said SpiceJet was carrying out its day-to-day operations on the cash generated by the advanced bookings.
SpiceJet’s net loss widened to Rs 275 crore in the three months ended December 2014, mainly on account of lower passenger numbers and a one-time cost of Rs 295 crore.
The airline was forced to ground flights for some days during the December quarter after its vendors refused to offer credit. This resulted in the airline seeing a 31% decline in capacity, while revenue fell 27% to Rs 1,300 crore.