SpiceJet shares up 10 percent as firms look for stake (Lead)

July 9th, 2008 - 10:34 pm ICT by IANS  

Mumbai, July 9 (IANS) SpiceJet shares Wednesday rose by 10.8 percent to close at Rs.32.75 on the bourses following reports that various firms were eyeing a stake in the carrier. According to a TV channel, SpiceJet promoters have discussed the impact of bringing an investor on board at their board meet Wednesday.

However, SpiceJet executive chairman Siddhanth Sharma said: “Our merchant bankers are working on various options. They are going to get firm offers from whosoever is interested.”

Sharma said the appointed banker would present the offer to the board either by the end of this week or by early next week. “And then the board will meet sometime next week and take a decision,” he added.

Sources familiar to the development said SpiceJet may take funding from US billionaire investor Wilbur Ross, who made his fortune taking over bankrupt steel, coal and textile companies.

“If W.L. Ross invests $100 million (Rs 4.30 billion), its stake could be more than 15 percent,” sources said.

Earlier, UB group chairman Vijay Mallya had shown interest in striking a deal with SpiceJet for a share swap deal.

But sources in the airline indicated that SpiceJet directors were not interested in Mallya’s proposal. “Looking at the revamp of Deccan, the management felt that Mallya will not retain the brand as well as the business model,” said an official.

SpiceJet began negotiations with W.L. Ross & Co chairman and CEO Ross when talks with Mallya ended in a deadlock.

Global investment banking and securities firm Goldman Sachs has also joined the race to acquire the New Delhi-based low-cost carrier.

At present, SpiceJet has 38.5 percent of foreign holding, which will allow Ross to buy above 10 percent stake as the current foreign direct investment cap in civil aviation is 49 percent.

SpiceJet, which has over 10 percent market share, is looking at an investment of at least $100 million, to stay afloat and also to fund fleet expansion.

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