NRI promoters SpiceJet and SK Modi, in Legal battle
MUMBAI, AUGUST 18, 2005
TIMES NEWS NETWORK
A Legal battle seems to be brewing between the
NRI promoters of low-cost airline SpiceJet and SK
Modi, the original promoter of the airline, when
it was called ModiLuft. Modi on Wednesday said he
retains a 17% stake in the airline through a slew
of investment companies.
The issue has become murkier because a chunk of this
17% stake has been pledged as collateral to companies
like Reliance Capital, Hindustan Development Corporation,
the Leela group, DCM and others. Some of these shareholders
are said to have approached the courts to take over
the pledged shares.
Speaking to ET, Mr Modi said he has not sold his
stake to the Kansagras, the NRI promoters of SpiceJet,
and it still belongs to him. Commenting on the issue
from the SpiceJet management’s perspective, director
Ajay Singh said, “The investment companies owned
two crore shares of which one crore was pledged to
various creditors and the other one crore are ‘tainted’
since they were allotted by the Modis to themselves
at Rs 10 each, instead of the public issue price of
Rs 40.” The current promoters say they want to
pay the creditors to release the shares pledged to
them. uModiLuft saga fraught with trouble.
The conflict between the Kansagras and SK Modi has
come out into the open after the former initiated
talks to sell their stake to the Hindujas.
Adding to the complications is the fact that in
a judgement on July 15, the Delhi High court overruled
Mr Modi’s objection and accepted the move by
the NRI promoters to pay 50% of the creditors’
dues in order to get the shares released.
The Modis had opposed the settlement scheme saying
that the transfer of shares to Royal Holdings (SpiceJet’s
earlier name) had never happened. The SpiceJet promoters
say the transfer had been approved by Sebi in ’01
and was subsequently cleared by the FIPB.
The ModiLuft saga has been fraught with troubles
from the time the airline was launched in 1994. The
airline owed money to the Airport Authority of India
and the oil companies, apart from corporate creditors
to whom the shares were pledged as collateral.
According to the BSE website Reliance Capital has
40,20,400 shares or 2.6% stake of the company. However,
this is currently under receivership of the Mumbai
High Court. Mr Modi refused to comment on the issue
of pledging of shares with various companies saying
that the matter was sub judice.
On the shares pledged to Reliance Capital he said
they were his shares. But sources indicated that Reliance
Capital may be interested in taking over these shares.
When contacted Reliance Capital officials said these
are “baseless rumours” and do not deserve
any response.
Meanwhile, the SpiceJet shares were up 7.7% on the
BSE today and closed at Rs 85.30.
