Cloud clears? SpiceJet to get Rs 1,500 cr by 30 April; regulatory approvals could be a breeze

Beleaguered sudget carrier Spicejet will get the equity infusion of Rs 1500 crore by April in 4 tranches, a report in The Economic Times said today citing the revival plan submitted by its saviour Ajay Singh. The four tranches are as follows: Rs 100 crore on 25 January, Rs 400 crore on 15 February and Rs 500 crore each on 20 March and 30 April. The revival plan has been approved by the civil aviation ministry. However, there is no clarity on which are the investors who will be pumping in the money. Earlier media reports had said Singh is likely to team up with other investors to revive the airline he had co-founded years ago. [caption id=“attachment_2064019” align=“alignleft” width=“380”]  AFP[/caption] Singh, who has been credited with coining the tag line Ab ki barr Modi sarkaar during the election campaign, had on 15 January given a Scheme of Reconstruction and Revival of the airline to its board. The scheme included transferring of ownership and management control of the airline from Kalanithi Maran and Kal Airways to Singh. This would mean sale of 53 percent stake to the new promoters. After the company board accepted the revival plan, Firstpost had reported that Singh’s revival plan included expanding the airline’s fleet of Boeing aircraft to 26 from 19 now, immediately after taking over. Singh has also assured the ministry of civil aviation that all the 2,000 staff whom the airline was planning to retrench will merely be ‘benched’ and will likely be taken back when Boeing fleet expands. Spicejet has almost halved its Boeing fleet from a peak of 35 aircraft due to financial issues. Singh and his consortia need to let go of a large number of people initially due to fleet downsizing. The report also said Spicejet promoters are in talks with aircraft lessors and confident that no more aircraft will be repossessed. Lessors want 11 Boeings back due to non-payment of lease rentals. These lessors have been meeting the dgca in this regard. On 23 January, in a major relief to the airline, the civil aviation ministry approved Singh’s revival plan and regualtor DGCA allowed the airline to start advance booking. However, the revival plan will need further approvals from various other departments of the government and also market regulator Securities and Exchange Board of India. If there are foreign investors involved in the investment, the ariline will have to seek approval from the Foreign Investment Promotion Board. The Sebi is to examine whether the investors need to make an open offer to the minority shareholders of the airline. As per the regulator’s takeover code, a company that takes over the control of or buyus a 25 percent voting rights in another company has to make an open offer to the minority shareholders of the target company. A Mint report on 24 January, however, reported that the market regulator is likely to give a rare objection to the Singh on this count. Sebi is “set to apply sections 10 and 11 of the Substantial Acquisition of Shares and Takeovers (Sast) Regulations to exempt the investors from the requirement of an open offer”, the Mint report said citing anonymous sources. If indeed Sebi makes this exemption, it could be taken as an indication that getting other necessary approvals will be a breeze for Singh and his team.