Exiting the cash-strapped SpiceJet will cause “a substantial capital loss” to its existing promoters Sun TV group, says the group CFO, SL Narayanan.
In an interview to Business Line , he said, “The existing promoters (Kalanithi Maran and Kal Airways) will be incurring a substantial capital loss on the transfer of these shares.”
However, as part of the revival plan submitted to Ministry of Civil Aviation, Mr. Maran will invest about Rs 80 crore more into the company ahead of the new investors, to make the warrants that he holds fully paid up. These warrants will convert into 18 crore shares by 2016, which represents about 23 per cent of the fully diluted equity.
“Once the new investors come on board, our stake will stand further diluted, and we shall be a passive investor,” Mr. Narayanan said.
Last week, SpiceJet in its regulatory filing to the stock exchange said the company had agreed to transfer the current promoters’ stake of 53.48 per cent to the budget carrier’s original promoter Ajay Singh, and submitted its proposal to this effect to the Civil Aviation Ministry.
To a question on why Mr. Maran did not pledge his Sun TV shares to raise funds to keep SpiceJet going till a turnaround happened, he said, “That was unacceptable since the minority shareholders of Sun TV would have never forgiven us.”
The Chennai-headquartered media conglomerate entered into the aviation industry in 2010 by acquiring a controlling stake in SpiceJet. In the last four years, the company has been incurring losses, despite frequent capital infusion by Mr. Maran. It reported an accumulated loss of over Rs 2,600 crore and debts to the tune of Rs. 1,000 crore.
Talks with two US-based blue chip investors did not fructify due to some “extraneous reasons”, Mr. Narayanan said.
However, given the group's situation, “the consequences of not hiving off SpiceJet could have been a lot worse,” he added.
