Waiting for a formal recommendation from the aviation ministry...
The Securities and Exchange Board of India (Sebi) is expected to exempt the new promoters of the beleaguered low-cost carrier SpiceJet from making an open offer to minority shareholders if the ministry of civil aviation gives it the necessary nod.
A senior Sebi official pointed out that a mere request from the ministry would not suffice and it would need to refer the case to it as an ‘appropriate order’ under The Aircraft Act.
On January 15, SpiceJet informed the BSE that Kalanithi Maran and his associates had decided to transfer the ownership and management control of the airline to Ajay Singh, former promoter and his associates. Singh has submitted a revival plan for the airline to the ministry and is expected to infuse R1,500 crore in tranches, into the loss-making airline.
Singh met the capital market regulator to make a case for an exemption from an open offer. The SpiceJet stock closed at 23, up 0.45%, on the Bombay Stock Exchange on Tuesday.
“If the ministry recommends that the promoters be excused from making an open offer because the airline is terminally ill and that such an exemption would be in the larger interest of the public,” we are likely to support that,” the official told FE. He explained that if the company concerned was a BIFR case, the law specifically exempts promoters from making an open offer. Since SpiceJet is close to being a BIFR case, Sebi would have no objection to extending to the same dispensation to the new promoters.
Under the takeover code, exemptions are allowed provided the company falls under section 18 of the Sick
(Special Provisions) Act, 1985 (1 of 1986) or any statutory modification or re-enactment thereto. An exemption is also permitted provided a scheme of arrangement is endorsed by a ‘competent authority’ under any law or regulation.
SpiceJet’s accumulated losses are over R3,000 crore and it has liabilities of around R1,400 crore; the airlines owes banks a little under R300 crore and the Airports Authority of India close to R200 crore, R100 crore to private airports and lessors R700 crore.
The government is understood to have extended the credit period for the airline’s dues to AAI till end January. The airline has been losing market share from close to 15% in November last year.