Our Bureau

New Delhi, Nov. 12

TEMASEK Holding has decided against picking up a stake in the domestic low-cost airline SpiceJet. "Temasek is not participating. There were some issues," the airlines' Chief Executive Officer, Mr Siddhanta Sharma, told Business Line.

While Mr Sharma refused to explain why the Singapore-based company decided to pull out, industry sources said that the deal did not materialise due to differences regarding pricing. "There were differences between the two parties on commercial terms and the conversion price," the sources said.

In September, the airline announced that at the invitation of its board of directors, Singapore-based MacRitchie Investments (a wholly-owned subsidiary of Temasek Holdings) and Istithmar, a private equity firm in Dubai, had agreed to invest $20 million in the equity capital of the company. SpiceJet had planned to have a $7-million foreign currency convertible bond issue that was slotted for the Luxembourg Stock Exchange and was to close in October.

Asked how the airline planned to make up the shortfall caused by Temasek's decision, Mr Sharma said that other investors were examining the prospects of investing, including Istithmar. "There are three or four other parties who are also examining the prospects. Their lawyers are going through the papers. The proposed bond issue will open soon," Mr Sharma said.

The low cost airline that took to the skies in May has a fleet of Boeing 737 aircraft. It has announced plans to start operations to South India from November 14. The airline plans to operate a daily flight between Delhi and Chennai and between Delhi and Hyderabad from November 14.

(This article was published in the Business Line print edition dated November 13, 2005)
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