Fair trade watchdog Competition Commission of India (CCI) Thursday cleared Ajay Singh's proposal to acquire a majority stake in cash-strapped SpiceJet , moving closer to the much-needed recapitalisation of the budget carrier.
With the CCI nod, the low-cost carrier's original promoter is closer to taking the management control and ownership of SpiceJet. The CCI is learnt to have approved the deal that would see Singh acquiring more than 58 percent stake in SpiceJet.
In an exclusive interview to CNBC-TV18, Singh, he expects to put in money into SpiceJet by February 24. Singh on Wednesday had said that Rs 400 crore will be invested in the airline immediately after getting CCI approval, as part of the first tranche of committed investment.
Under the revival plan, Singh would acquire majority stake and control in the airline. Besides, outgoing promoters, Maran family, would put in funds. Speaking to CNBC-TV18, Singh said he expects the transfer of shares from Marans to him in a day or two.
According to Singh, the deal falls within purview of clauses which exempt him from making an open offer. He expects the second tranche of money to come in by March-end and the final tranche by April-end, however he refrained from commenting on who the partners are.
"Recent sales have boosted SpiceJet's confidence. We are seeing things stabilising now along with very few cancellations," he added.
Below is verbatim transcript of Ajay Singh's interview on CNBC-TV18:
Q The competition watchdog CCI has cleared your revival plan. Have you been intimated by the CCI? Can you give us details?
A: I received a communication from the CCI clearing the acquisition of Maran's holding in SpiceJet.
Q: What does this mean in terms of the Rs 400 crore that will be infused immediately into the airline? How soon is that money likely to come in?
A: That money is likely to come in by next two-three days. We were waiting for the CCI approval to come in. Post that approval, there will be a transfer of shares from Maran to myself which should take place tomorrow and day after and then we expect that the money should come in on Monday or latest on Tuesday.
Q: You are saying Rs 400 crore should be infused by Monday or latest by Tuesday. In the last conversation you could not share the details because you were waiting for approvals from various regulators, you have got the civil aviation ministry's nod and now you have the CCI approval. Can you share with us the details on the consortium that is backing your revival plans for SpiceJet, who are the investors who are partnering with you?
A: I don't want to share those details at the moment but we will share them next week as the fund starts flowing into the company.
Q: Is it now clear that you don't need to make an open offer, have you got that clarity form the market regulator?
A: Our legal advice says that we do not have to make an open offer and that is what we are going by.
Q: But has there been any communication between the market regulator and yourself on this issue?
There has been no communication with the market regulator on this issue but there are certain provisions in the Sebi act which exempt an open offer and as per legal advice we fall within the purview of those provisions and therefore our legal advice is that we are not required to have an open offer.
Q: But has that been the communication of the civil aviation ministry as well because as per your scheme of arrangement we are given to understand that it is the civil aviation ministry that acts as the competent authority. So being the competent authority has the civil aviation ministry also given the go ahead that you will not need to make an offer?
A: They don't have to give any such intimation to us. They are required to clear or approve a scheme of revival and reconstruction which they have done.
Q: You are infusing about Rs 400 crore as early as next week but the quantum that you had proposed in that revival plan I am given to understand was Rs 1500 crore. So, when do we see the next tranche coming in?
A: Next tranche is proposed for end of March and that forms a part of the scheme that we had presented to the government.
Q: Can you also share some clarity on the conversations and communications that are on with your lessors because there seems to have been a communication which suggests that the lessors want to take back the aircraft. Has there been any communication that has sorted out this matter with SpiceJet and its lessors?
A: I am not in control of SpiceJet at the moment. Share transfer is yet to happen. Let me comment on those issues related to SpiceJet once the share transfer actually happens.
Q: Can you shed some colour on how things are going with SpiceJet because there has been a flurry of discounts that the airline has announced. Can you take us through where things currently stand in terms of load factor, what information do you have?
A: Things are stabilising at SpiceJet and there has been practically very few cancelation of flights and that they are flying the schedule that they have been flying for the past one month in a reasonably seamless manner. The sales have enabled them to boost traffic and confidence but again in terms of more specific details let the acquisition be complete and then I can comment on what is actually happening at SpiceJect.
Q: As part of the revival plan how soon do you hope to come close to normal operations? By when do we expect to see operations coming back to some degree of normalcy?
A: The operations are fairly normal even now. Our expectation is that it will happen sooner rather than later.
Q: Some time line that you can share with us?
A: Tough to share a time line. Let me complete the acquisition process and then I will comment on these issues.
Q: What have you decided on the fleet? Is it going to be a twin fleet strategy? Also give us a sense of how you are going to expand; you have been talking about expanding the 26 Boeing. So a comment on the Q400 and expansion of the Boeing fleet please?
A: Again as I said to you before, let the acquisition be complete and then early next week I will be in a better position to comment on the direction going forward.
At this time SpiceJet has filed a summer schedule which includes the Boeing fleet as well as the Bombardier fleet and therefore they will be operating both the fleets for the summer schedule at least and once the acquisition is complete, we can take a call on the direction going forward and what happens in the winter schedule will be decide in those discussions.
Q: There was a lot of commentary earlier on the frequent sales that SpiceJet was doing. It has started again in the last one month. Is that something that meets with your approvals?
A: I am nobody to approve what SpiceJet is doing until the acquisition is complete. SpiceJet takes its own calls at this time and once the acquisition is complete again I can comment a little more on what strategies they are adopting.
Q: You said that the second tranche will come in by the end of March. Does that mean the entire Rs 1500 crore that you have budgeted for the revival plan will come by the end of March?
A: In terms of the revival scheme that we presented to government there are three tranches in which the money comes in. The money which comes in next week, a portion which comes in, another tranche comes by the end of March and the final one by April end, as per our current plan.
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