14. January 2007


Date: 14 Jan. 2007
SpiceJet, an Indian low- fare carrier, said its shareholders approved the sale of as much as $70 million of stock to investors, including Tata Group, Goldman Sachs Group and BNP Paribas.
The company will issue 50 million new shares at about 52 rupees, or $1.17, each, resulting in an equity dilution of 23 percent to 24 percent, Ajay Singh, executive director of the airline in New Delhi, said Friday.
Indian airlines are selling shares and bonds to buy new airplanes as low fares and rising incomes encourage more of the 1.1 billion people in India to fly. SpiceJet, which sold $80 million of convertible bonds in December 2005, has ordered 20 airplanes from Boeing.
"We feel that this is all the money that the airline needs at this point of time and with the expanding market and with our expanding share in the market, we do not want to dilute any more than what we're doing," Singh said.
SpiceJet last month got offers from investors for $118.5 million worth of stock in the carrier.
Texas Pacific Group Ventures, which last month bid for $30 million of the airline's shares, later withdrew from the sale. Texas Pacific has "indicated to us that they are at this point of time very involved with the Qantas deal which they are trying to do," Singh said.
Qantas Airways, the largest Australian airline, in December accepted an 11.1 billion Australian dollar, or $8.7 billion, leveraged buyout offer from a group that includes Macquarie, Texas Pacific Group and Allco Equity Partners in what would be the world's biggest aviation takeover.
SpiceJet announced the plan to sell shares to investors including Tata Group and Goldman Sachs on Dec. 12. The unprofitable airline aims to more than double its fleet to 28 airplanes over the next two years.
SpiceJet, which started flying in May 2005, plans to expand its fleet to 18 planes by December 2007 from the current 10, Singh said on Dec. 12. By December 2008, the airline plans to have the 28 airplanes operating as it competes with Air Deccan and GoAirlines (India).
"At this point of time, less than one percent of Indians fly. So, we think there is immense potential for an increase in that traffic," he said.
Singh said the air travel market is likely to grow 35 percent to 40 percent annually over the next few years.
SpiceJet's directors are to decide Jan. 24 on the amount of shares that will be sold to each investor, Siddhanta Sharma, the chairman of SpiceJet, said.
The shareholders approved the plan to sell shares of about $17 million to the Tata Group through two companies, Ewart and InvestCorp. Istithmar, an investment company based in Dubai, has requested to buy $25 million of shares. Goldman Sachs bid for $5 million and BNP Paribas for $15 million. KBC UK, a British venture capital fund based, has asked to buy $2.5 million of shares and Teleminex (India) wants to buy $7 million of shares, Sharma said.
Source: http://www.iht.com