WL Ross extends SpiceJet a $100 million lifeline

WL Ross announces execution of definitive documents for funding transaction
13-Aug-2008

SpiceJet Limited and WL Ross & Co. LLC (WL Ross) announced the execution of definitive documents for a funding transaction with WL Ross and others.

The completion of the transaction will make available up to INR421 crores (USD 100 million) to SpiceJet. This is higher than the INR345 crore (USD 80 million) proposed earlier and has been made possible partly through the participation of Istithmar World Capital and SpiceJet Director, Mr. Ajay Singh.

The infusion of capital will take place in two successive tranches. Completion of the funding of the first tranche is subject to certain conditions precedent, which are expected to be fulfilled in the next two weeks. The remainder of the funding will be received after shareholder approval which the Company will seek shortly. As part of the transaction, Goldman Sachs has agreed to subscribe for equity warrants in the Company under the preferential issue guidelines of SEBI and subject to requisite approvals.

Mr. Bhulo Kansagra and Mr. Ajay Singh, Board Members of SpiceJet, said "We are delighted that such a large amount of funding has been made available to SpiceJet at a challenging time for the aviation industry in India. This investment validates the confidence of our investors in the low cost model that SpiceJet has chosen to follow. We are delighted to have WL Ross on-board SpiceJet and we are confident that this will better enable SpiceJet to maintain its proud position as the most efficient airline in the country."

Mr. Wilbur L. Ross Jr., Chairman & CEO, WL Ross & Co. LLC said, "This financing is intended to give SpiceJet the staying power to get through the industry consolidation that is underway. We also gain encouragement that oil prices have been abating and that the government has appointed a Committee under the Chairmanship of the Cabinet Secretary to recommend measures to stabilize the industry."

Mr. Ranjeet Nabha, Managing Director & CEO of WL Ross India said, "We have worked closely with the promoter group and Istithmar World Capital to provide SpiceJet with a strong capital base that will enable it to emerge from the current down turn and be recognized and admired, not only in India, but on the global stage." Mr. Ross and Mr. Nabha are expected to join the Board of Directors of SpiceJet.

(c) Centre for Asia Pacific Aviation.