One of the reasons for the price offered being lower than the market price is that there is a Rs 200 crore tax liability on the company, which is currently under dispute.
WL Ross, which has invested $68 million in SpiceJet through Foreign Currency Convertible Bonds (FCCBs), has two options, officials explained. It could convert FCCBs into shares at a price of Rs 35 a share by November, which will give it around 30 per cent stake. The second option is to redeem FCCBs at a premium of 40 per cent, which means the airline will pay around $95 million (around Rs 450 crore).
Wooing other shareholders may be a challenge.
Ajay Singh and his associates, for instance, who hold 12 per cent equity in the company and played a key role in setting it up, have clearly said they are not interested in selling out. “There is no question of selling our shares to anyone. The company is doing well and the valuation being talked about is not at all appropriate,”said Singh, who is also a director in the company.
Besides Ajay Singh and his associates, the Kenya-based Kansagara group holds 12.89 per cent in the company and a clutch of mutual funds hold 12.84 per cent. The rest is with the public and with some investment funds.
A top official involved in the deal for Maran said: “We have made an offer to Ross, they have come back to us, saying they are open to discussion. That is where the deal stands now.”
An e-mail to Kalanithi Maran did not elicit any reply. WL Ross India CEO Ranjeet Nabha said: “I cannot talk”.
When contacted, Sanjay Aggarwal, Chief Executive Officer, SpiceJet said: “As a policy, we do not comment on market rumours and speculations”.
Sources close to Maran said that if only the 30 per cent stake of WL Ross is bought, it would have to be followed by an open offer. If a majority of the shareholders do not subscribe to the open offer, Maran would then be left with a minority in SpiceJet, which is not what he is looking for.
During the period from November last year to March this year, the stock price of SpiceJet rose by over 70 per cent. Jet Airways’ stock, however, rose only by over 7 per cent and Kingfisher fell.
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