Shares of low-cost carrier SpiceJet spiked up on October 13 when ET Now aired that IndiGo’s co-founder Rakesh Gangwal was at considering to buy a sizeable stake in the company.
Gangwal, who along with his wife Shobha Gangwal has a share of 16.22 per cent in IndiGo-operator InterGlobe Aviation, didn’t respond to any request for the comment. The Chinkerpoo Family Trust of Gangwal also captures a 13.5 per cent share in Indigo, as per the exchange data. The news of his decision sent shares of SpiceJet up as much as 20 per cent.
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Low cost carrier SpiceJet, which is cash trapped at the moment is “struggling to stay afloat”, and has been looking to collect funds and reinstate operations for around a fourth of its fleet that has been butchered by stiff competition in the sector.
As of 3.15 pm, the stock was up about 20 percent on Bombay Stock Exchange to Rs 43.82.
Apart from it, a hearing in the Delhi High Court in its case against Sun Group chairman Kalanithi Maran also had an effect on the stock. The case is related to an arbitral award that was partial of Maran.
In February 2015, Maran and his investment vehicle, KAL Airways, shifted their 58.46 percent in SpiceJet to Singh, who took on the airline’s liabilities of approximately Rs 1,500 crore. According to the agreement signed, Maran and KAL Airways confirmed that they paid SpiceJet Rs 679 crore for publishing warrants as well as preference shares. Maran accused that the warrants and preference shares were not allotted and started off with arbitration proceedings against SpiceJet and Singh.
In July 2018, an arbitration panel rejected Maran’s plea of damages incurred worth Rs 1,323 crore for not issuing warrants to him and KAL Airways but granted him a refund of Rs 579 crore along with interest.
In September, SpiceJet said it has completed the payment of Rs 100 crore to ex promoter Kalanithi Maran’s KAL Airways. The airline noted that it had “made a payment of Rs 77.5 crore” on September 11 and the remaining payment of Rs 22.5 crore was made on September 12.
Until now, SpiceJet has paid a sum of $8 million to Credit Suisse as per the agreement signed between them.
A day later it was reported that IndiGo co-founder and former promoter Rakesh Gangwal is planning to pick up a stake in low-cost carrier SpiceJet, on Saturday, a banker close to him rubbished the reports and said that Gangwal has no plans to do so.
According to the recent company data, Gangwal and his wife Shobha Gangwal held 13.23 per cent (5,10,21,132 shares) and 2.99 per cent stakes, respectively in IndiGo operator InterGlobe Aviation as of June-end.
Speaking to the Economic Times, the banker said that Gangwal already owns 25 per cent of IndiGo and doesn’t have any plans to further invest more in SpiceJet.
“He still owns 25% in IndiGo. It doesn’t make the remotest sense for him to invest in SpiceJet…Moreover, he sees SpiceJet as a dying airline,” said the banker.
Gangwal “is upset that retail investors are misguided thus, He would like to appeal to the Sebi to investigate the root of such baseless rumours,” the banker added.
