Spicejet plans to raise over Rs 3,200 cr via debt, equity

New Delhi: Spicejet, a struggling domestic airline, intends to raise Rs 3,200 crore through QIP, warrants, and a capital infusion by the promoter, as stated in a presentation on Friday. The money will be used for retrieving the fleet in operation, settling liabilities, introducing new fleet, and other general purposes, as mentioned by SpiceJet in the presentations.

Spicejet is aiming to collect Rs 2,500 crore via QIP and Rs 736 crore through Previous Warrants and promoter infusion, as mentioned in a presentation to investors for the planned capital injection. The funds to be raised will depend on the agreement of shareholders.

SpiceJet, promoted by Ajay Singh, was able to raise only Rs 1,060 crore through preferential issues in January this year, falling short of its Rs 2,250 crore funding target announced in December last year. The airline cited reasons such as fleet reduction, grounding of aircraft, increased working capital costs, rising fixed costs, fixed airport rentals, and unpaid statutory dues as the causes for its current troubles.

As per the presentation, the number of operational planes decreased to 28 in 2024 from 74 in 2019, with 36 aircraft still grounded due to financial problems. Yet, as per the real-time aircraft fleet monitoring site, Planespotter.net, it was reported to have 20 planes in service as of September 5 and 38 grounded.

It should also be pointed out that many of these planes are not flying because SpiceJet's lessors and other suppliers are suing the airline for not paying. It was also mentioned that there are outstanding dues of Rs 3,700 crore to be paid to the lessor, as well as liabilities in engineering & EDC, resulting in aircraft being grounded and Rs 650 crore in outstanding statutory dues. SpiceJet also mentioned that part of the plan to improve its performance includes bringing grounded planes back into service, growing the fleet, and strengthening its market presence.

In a subsequent submission, SpiceJet announced that it has reached an agreement with Carlyle Aviation Management to reorganize a portion of its outstanding payments for aircraft lease rentals totaling USD 137.68 million.

In the filing, SpiceJet mentioned that lessors may also think about buying compulsorily convertible debentures of SpiceXpress & Logistics, a subsidiary company of the airline, for USD 20 million through the exchange of lease arrears. These debentures would have a higher priority than all current and future equity or equity-linked securities of SpiceXpress. It was also mentioned that a portion of the unpaid lease payments to Lessors, amounting to USD 137.68 million as of June 30, 2024, would be restructured to USD 97.51 million through issuance/purchase of securities, pending adherence to Indian law, shareholder approval, and final agreement between parties.

The airline started by offering multiple equity shares of the company at Rs 100 per share, which is a 39 percent premium on Friday's closing price, with a total value not exceeding USD 30 million. The transaction restructuring will involve reorganizing a portion of the overdue payments to the Lessors, helping to reduce the company's debt burden. It stated that the transaction will partially reorganize the remaining overdue payments to the lessors, resulting in a reduction of the company's debt.