SpiceJet looking at possible Merger

SpiceJet rose 1.51% to Rs 23.50 at 10:47 IST on BSE on reports US-based private equity fund WL Ross and Company is in talks with Jet Airways and Kingfisher Airlines for a possible merger of the company.

It may be recalled that WL Ross and Company had recently infused $80 million in SpiceJet. Meanwhile, the BSE Sensex was up 421.21 points, or 3.16%, to 13736.81. Stocks rose across the globe on reports US policymakers will work through the weekend on a plan that will focus on dealing with illiquid assets -- the toxic source that has shattered balance sheets, pushed Lehman Brothers to file for bankruptcy protection and prompted the US bailout of American International Group this week. On BSE, 1.83 lakh shares were traded in the counter. The scrip had an average daily volume of 14.56 lakh shares in the past one quarter. The stock hit a high of Rs 24.70 and a low of Rs 23.15 so far during the day. The stock had a 52-week high of Rs 104.80 on 08 January 2008 and a 52-week low of Rs 20.50 on 2 July 2008. The scrip had underperformed the market over the past one month till 18 September 2008, falling 17.76% compared to the Sensex’s 9.08% fall. It had also underperformed the market in the past one quarter, falling 29.85% compared to Sensex’s 13.66% fall. The small-cap low cost carrier has an equity capital of Rs 240.65 crore. Face value per share is Rs 10. According to reports, the idea to merge SpiceJet is to increase the valuation of SpiceJet or the money invested by WL Ross before the firm exits. As per reports, WL Ross has also suggested strict cost controls and tighter management to turn around SpiceJet. A senior executive at the UB Group, which controls Kingfisher Airlines, confirmed the Ross approach, saying the talks are at a very preliminary stage, the report said. WL Ross had committed to investing $80 million in SpiceJet in July this year. Goldman Sachs in August 2008 invested $20 million in SpiceJet. The Tata Group owns a strategic stake of about 6% and Dubai's Istithmar owns 13.4% in SpiceJet. SpiceJet reported net loss of Rs 129.23 crore in Q1 June 2008 as against net profit of Rs 18.54 crore in Q1 June 2007. Sales rose 72.3% to Rs 457.19 crore in Q1 June 2008 over Q1 June 2007. SpiceJet is a domestic low-budget air carrier which provides scheduled flights between major cities in India. The company operates a fleet of Boeing 737 aircraft.