SpiceJet rights issue in September-October

The new management of the second largest budget airline SpiceJet Ltd is considering a rights issue after the open offer of media baron Kalanithi Maran closes on August 25, two sources familiar with the development told DNA.

“The airline (SpiceJet) is looking at coming out with the issue around September or October,” said one of the sources.

He did not reveal the size or the ratio at which it will be issued. Another source said the company was looking at raising around $50-60 million.

“The inflow of funds has dwindled after recent exit of shareholders. The funds from the issue will be used for the airlines expansion plans (acquiring aircraft and launching international services),” said the second source.

The first source said part of the proceeds raised through the rights issue would be used to pay off Bhupendra Kansagra and family, who are the promoters of SpiceJet.

Kansagra and his family own around 12.89% stake in the airline. A back of the envelop calculations shows it translates into around Rs150 crore at the price 47.25 per share that Maran is paying for acquiring the promoters shares in SpiceJet.

Apart from the promoters’ stake, Maran’ KAL Airways has also acquired private equity WL Ross’ stake in the airline company.

Maran has acquired 38% stake in the no-frill airline for around Rs740 crore and has made an open offer to acquire another 20% in it at Rs57.76 per share. The offer opens on August 6 and closes August 25 and would involve an outgo of Rs480 crore.