SEBI Grants Exemption To Spice Healthcare In Proposed Acquisition Of SpiceJet Shares
This exemption was requested by Spice Healthcare, which is part of the promoter group of SpiceJet, as it plans to acquire additional equity in the airline without triggering a mandatory open offer.
The Securities and Exchange Board of India on Friday granted an exemption to Spice Healthcare Private Limited from complying with the takeover regulations in relation to its proposed acquisition of shares and voting rights in SpiceJet Limited.
This exemption was requested by Spice Healthcare, which is part of the promoter group of SpiceJet, as it plans to acquire additional equity in the airline without triggering a mandatory open offer.
Spice Healthcare Private Limited is co-owned by Mr. Ajay Singh, the promoter of SpiceJet, and the company filed an application on Dec 6, 2023 seeking an exemption from SEBI’s takeover regulations.
Under the concerned SEBI , the acquisition of more than 5% of voting rights in a financial year necessitates an open offer.
Reasons given for the move
SpiceJet faced significant financial distress, heightened by the the COVID-19 pandemic. To deal with this, the airline’s promoters, including Spice Healthcare, infused Rs.200 crore into the company through a preferential allotment of shares and warrants.
Spice Healthcare subscribed to 3.41 crore equity shares for Rs.101.97 crore and an additional 13.14 crore warrants for Rs.98.03 crore. The warrants were issued at a price of Rs.29.84 per share.
It was submitted before the market regulator that the acquisition will strengthen SpiceJet's finances and help the airline meet eligibility requirements under the Emergency Credit Line Guarantee Scheme, through which it secured credit facilities of ₹200 crore from YES Bank and Indian Bank.
Conditions for exemption
Spice Healthcare's acquisition of voting rights will be capped at 5% per financial year.
The shares acquired through the conversion of warrants will be locked in for 24 months (18 months as per SEBI’s regulations, plus an additional 6 months).
Spice Healthcare must comply with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and maintain the minimum public shareholding of 25%.
The proposed acquisition must adhere to all relevant laws under the Companies Act, 2013.
Upon completing the acquisition, Spice Healthcare must report to SEBI within 21 days.
Once the warrants are converted, Spice Healthcare's stake in SpiceJet will increase to 18.1%, from the current 4.36%. The overall promoter group will hold 55.7% of the company’s equity, up from 48.27%, while public shareholding will drop to 44.3%.
