Sun Network Kalanithi to buy 37% stakes in SpiceJet

W L Ross and Ishtitmar on Friday converted bonds into equity shares of SpiceJet as Sun TV promoter Kalanithi Maran inches closer to acquire the no-frills carrier.

US-based investor W L Ross, which specialises in distress assets, has converted foreign currency bonds equivalent to nearly 14% stake in SpiceJet while Dubai-based Ishtitmar received a 7% stake on conversion. Both conversions took place at Rs 25 apiece.


London-based Bhupendra Kansagra, the promoters of SpiceJet, has teamed up with W L Ross to sell their combined 37% stake in the carrier to Mr Maran, said at least two persons close to the deal.

To begin with, W L Ross and Mr Kansagra will sell a 24% stake to Mr Maran. The parties have agreed that W L Ross will also sell another 13% stake when it converts the remaining of its bonds in December this year.

A formal announcement of the deal is expected shortly, if not on Saturday, said at the persons quoted earlier.

Under the rules, Mr Maran will have to launch a 20% open offer for the minority shareholders after it buys the combined stake of W L Ross and Mr Kansagra. Mr Maran's stake will go up to 57%, if the open offer is fully subscribed. In case the open offer fails, his stake will be around 37%.

A banker close to the deal said the deal is expected to be priced at Rs 40 a share. The SpiceJet stock lost 3% to close at Rs 56 in a flat Mumbai market.

However, the stock went down to Rs 52 from day's high of Rs 59 after ET NOW, this paper's channel, aired a story on Mr Maran's imminent acquisition of the company.

When contacted, Spicejet CEO Sanjay Agarwal told ET NOW that the company does not comment on market speculation. S Natrajan, vice president of Sun TV who is leading the negotiation on behalf of Mr Maran, declined to comment. Mr Maran and WL Ross could not be reached for comments.

In 2008, WL Ross and Ishtitmar had invested $80 million and $12 million, respectively, in SpiceJet in the form of foreign currency convertible bonds.

Mr Maran who runs 20 television channels and two newspapers in South India has been negotiating with Mr Kansagra and WL Ross for over six months now. They had failed to reach an agreement earlier due to difference on valuation. E&Y is advising Mr Maran.