Competition Commission of India (CCI) has given a green signal to Ajay Singh's proposed acquisition of a controlling 58.46 per cent stake in cash-crunched SpiceJet, according to a stock market disclosure.
Although the CCI approval was seen as just a formality, it will allow the low-cost carrier’s co-founder and former co-promoter Singh to take the management control and ownership of the carrier.
As part of the change in ownership, Kalanithi Maran, his wife Kavery and another representative of Sun Group, S Natrajhen resigned from the company's board last month.
Under the revival plan, SpiceJet will get a fresh infusion of a little over Rs 1,875 crore ($300 million) from new as well as outgoing promoter Maran.
Maran, who is selling his entire stake to Ajay Singh, is to subscribe to fresh redeemable preference shares, which could be seen as a part of a conditional plan where Maran would be infusing some of the cash he gets from selling his shares back into the company through redeemable securities. His current holding is worth around Rs 823 crore.
Maran had acquired majority stake in SpiceJet over a period of time starting with a significant minority stake in mid-2010 for Rs 750 crore. He had later pumped in more cash to hike his stake.
Singh, who, along with NRI Bhupendra Kansagra, had started SpiceJet in 2005 exited the company in 2010. He is now acquiring a controlling stake in the loss-making airline reportedly with the backing of JPMorgan to restructure and revive the airline.
SpiceJet is the second-largest budget carrier in the country behind IndiGo and overall the fourth-largest carrier by passenger numbers.
The company's scrip rocketed over 18 per cent and was quoting at Rs 23.55 a share in mid-day trades on the BSE in a weak Mumbai market on Friday.
(Edited by Joby Puthuparampil Johnson)