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Nevrekar
8th Jul 2008, 15:41
Billionaire Wilbur Ross in Talks With India SpiceJet (Update1)

By Vipin V. Nair

July 8 (Bloomberg) -- U.S. billionaire investor Wilbur Ross, who made his fortune taking over bankrupt steel, coal and textile companies, said he is in talks with India's SpiceJet Ltd. for a possible investment in the money-losing carrier.

``We are having discussions with SpiceJet, but it is too early to know whether the negotiations will be successful,'' Ross said in an e-mail today.

New Delhi-based SpiceJet, the nation's second-largest budget airline, and rivals are looking for investment after record high fuel prices drained funds needed to expand. Indian carriers may double their combined losses to $1.5 billion this year because of rising fuel expenses, the Centre for Asia Pacific Aviation, an industry consultant, predicted last month.

``Smart investors know that this is a good opportunity to acquire assets,'' said Kapil Kaul, chief executive of the local unit of the Centre. ``In the long term, the Indian aviation market will be big and institutional investments will continue to flow in.''

Ross' first investment in India was in October 2006, when he acquired OCM India Ltd., a worsted suiting maker, for $37 million, according to data on Bloomberg.

The Economic Times reported today that Ross is competing with Indian billionaire Vijay Mallya to invest in SpiceJet. The carrier gained 22 percent yesterday after the newspaper reported July 5 that Mallya would pay cash for the stake.

SpiceJet yesterday said its board didn't consider selling the stake to Mallya, who controls rival Kingfisher Airlines, at a board meeting June 30. The company reiterated it had appointed a financial adviser to help it raise funds.

The shares dropped 2.3 percent to 29.75 rupees in Mumbai, extending this year's decline to 66 percent.

bad_attitude
9th Jul 2008, 04:49
Source: DNA - Money - WL Ross to buy fresh SpiceJet equity - Daily News & Analysis (http://www.dnaindia.com/report.asp?newsid=1176308)

WL Ross to buy fresh SpiceJet equity

But funding limited to around Rs 200 cr due to 49% stake cap

BANGALORE: Budget airline SpiceJet seems to have made some headway in its talks with the American turnaround investor Wilbur L Ross for infusion of capital in the form of equity.


A source close to the development said the budget airline is considering issuing fresh equity in the name of the billionaire’s company —- WL Ross & Co.
The source said that the airline board will meet on Wednesday to clear the proposal.

“They (SpiceJet) are looking at issuing preferential shares to Ross & Co. The board will be meeting on Wednesday (to clear the proposal),” said the source.


The price of the preferential share will be worked out on the basis of the Securities and Exchange Board of India (Sebi) formula —- 26 weeks average share price or the average share price over the last 14 days, whichever is higher, the source said.


SpiceJet executive chairman Siddhanta Sharma did not confirm the deal beyond stating that talks were on with Ross. “We have appointed N M Rothschild & Sons (India) to advise us on raising the funds from the market and they have contacted various investors. Wilbur Ross is one of them,” said Sharma.



As regards the board meeting on Wednesday, Sharma said during the June-end board meet, it was decided to meet again in early July. “The final decision on the date (of the meeting) has still not been taken,” Sharma said.
What could have turned the deal in favour of Ross must be better valuation and retention of control.