SpiceJet to issue convertible securities to promoters

Last Updated: Wed, Nov 21, 2012 19:42 hrs

Sun Group-promoted SpiceJet Airlines has said it would raise equity capital from its promoters by issuing convertible debentures or warrants to fund expansion plans. The issuance would be convertible up to 52.18 million equity shares, it added.

At the end of the quarter ended September, the company had 484.35 million shares issued, with the promoter holding at 48.59 per cent. The issuance of convertible debentures or warrants would raise the stake of promoters up to 53.59 per cent.

On Wednesday, the Sun Group said SpiceJet needed capital for expansion and for this, it would explore various options, including equity contribution from shareholders and debt. It added the promoters had no plans to sell their shares.

SpiceJet shares on Wednesday rose seven per cent to close at Rs 37.4 a share on the BSE.

Sun Group chief Kalanithi Maran and his wife, Kavery Maran, have resigned from one of the promoter entities of SpiceJet, triggering speculation on a possible sale of the Maran family’s majority stake in the airline. The group has, however, denied any plan to sale promoters’ stake in SpiceJet, saying it might consider other options to raise capital. “We certainly need funds for fleet expansion and whenever there is an attractive opportunity (for partial stake sale), we will look at it. But as of now, there is nothing on the cards,” S L Narayanan, chief financial officer of the Sun Group, told a news agency.

On financing options, Narayanan said the company might consider debt, lease financing and funding from existing shareholders. “We will go for the right type of financing, at the right time and at the right cost. We do not want risky and costly funding. But as we go into 2013-14, we will definitely require capital,” he said.

On the capital required by the airline, Narayanan said the funding requirement would be clear by March. This was because the airline was reconsidering its fleet plans, as growth had slowed. The load factor had, however, improved.

Narayanan said Kalanithi and Kavery Maran had resigned from Kal Airways to organise the board structures of various group companies. “It is part of a reorganisation to free time for promoters for other duties....Maran has checked out from some boards in which he wasn’t able to provide ample time,” he said.

“But his resignation from the Kal Airways board should not be understood as promoters planning to exit or even dilute their stake in SpiceJet,” he said, adding Maran remained chairman of the SpiceJet board and continued to provide leadership and strategic direction to the airline. “There are no plans to induct any strategic partner or sell equity stake to any financial investor at the moment,” he said.

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