Maran to raise stake in SpiceJet to 43 % by October
13 September 2011
Low cost carrier Spicejet will raise a much-needed Rs130 crore by issuing fresh shares to its majority-owner Kalanithi Maran at Rs36 a share by October.
Kalanithi Maran, promoter of media group Sun TV Network Ltd, will increase his stake in the carrier by October, according to a report in the Mint newspaper.
SpiceJet shares were trading up by about 8.54 per cent at Rs26.05 in the morning trade on the BSE.
The infusion and stake increase will take place through the issue of convertible preference shares at a premium of 50 per cent to the current share price of Rs24, the newspaper reported, quoting SpiceJet's CEO Neil Mills.
In the morning, various TV channels and news agencies confirmed the news by interviewing Neil Mills.
"It shows the promoter has confidence in the business case,'' Mills told Mint, referring to the airline's fast expanding footprint in the so-called regional market, involving flights to and from Tier II and III cities across India.
Ahead of its 2010 sale to Maran's KAL Airways Pvt. Ltd, the airline tried to raise money through a preferential issue of shares, and, after that failed, through a sale of shares to private equity investors and an issue of global depository receipts.
In June, SpiceJet has sought the Reserve Bank of India's approval to raise $270 million from Canada's export finance agency Export Development Canada (EDC) for aircraft purchases.
Airlines typically prefer borrowing overseas to avail softer interest rates.
The airline plans to add 11 aircraft to its fleet of 25 and raise the number of flights to 300 per day from 190 now.
SpiceJet had earlier acquired a new fleet of Q400 aircraft from Bombardier as it expands its network to connect more Tier II and Tier III cities, including Bhopal, Indore, Mangalore and Tirupati.
The low-cost airline will receive 30 more Q400 aircraft from Bombardier and is expected to launch its services to these new destinations from September 21, according to its chief operating officer, S Natrajhen.