Ajay Singh pledges more shares amid Maran dispute
NEW DELHI: Ajay Singh, the promoter of low-fare airline SpiceJet Ltd, has pledged more shares over the past few months to help the airline’s finances even as it awaits a key verdict on a share transfer dispute with former promoter Kalanithi Maran.
The number of promoter shares pledged rose to 24.37% of 59,94,50,183 total shares by the end of September from 20.19% at the end of June, according to BSE data. During the same period, the airline saw an outgo of ₹579 crore towards a court deposit in the ongoing dispute with Maran, which is under arbitration.
The airline has deposited ₹250 crore in a cash deposit and the balance of ₹329 crore by way of a bank guarantee.
“The additional shares were pledged towards non-fund limits for security deposits. Their value keeps going up and down so that percentage keeps changing. About 50% money for the court deposit came from internal resources, rest from the bank,” said a person with knowledge of the matter, who is close to the airline and did not wish to be named.
A SpiceJet spokesman said the shares were pledged to support the “credit line of the company” and the airline did not see any additional fund requirements towards the ongoing case.
The dispute with Maran relates to the transfer of the airline from Maran to Singh. Maran had transferred a 58.46% stake in SpiceJet, or 350.4 million shares, to Singh in February 2015, leading to a change in ownership of the airline. Under the share purchase agreement, Maran was to receive redeemable warrants in return for the ₹690 crore he spent on SpiceJet towards operating costs and debt payments.
Maran has gone to courts saying he has not been issued these warrants, and the matter is under arbitration. Most of the arguments in the arbitration from both sides are nearly over and the verdict is expected anytime now, a person close to Maran said, requesting anonymity.
Maran has said he wants the airline back.
“Our fundamental plea before the arbitration panel is that the deal has become void because the warrants have not been allotted so we are basically suing for restitution under section 65 of the Contract Act. We are saying reverse the entire transaction,” said a person close to Maran who did not wish to be named.
If this can’t be done, then Maran wants to be compensated.
Singh has nursed the airline from a near shutdown and a valuation of ₹650 crore to ₹8,300 crore (Jet Air is valued at ₹7,200 crore and IndiGo at ₹43,000 crore).
“The entire case of the other side is based on wrong surmises whereas our stand is that there has been no breach by the company or its promoters of any sort. Therefore, the suggestion that we will require more funds is completely baseless,” the SpiceJet spokesman said.