 "SpiceJet")
SpiceJet’s board on Tuesday approved the raising of Rs 2,250 crore in fresh capital from 64 entities, including financial institutions, foreign institutional investors, high-net-worth individuals, and private investors, through the issuance of equity shares and warrants. The airline has been facing a cash crunch for the past several quarters.
It is also dealing with multiple court cases regarding money owed to former owner Kalanithi Maran, Credit Suisse, aircraft lessors and engine lessors.
On Tuesday, the airline reported a consolidated net loss of Rs 449.04 crore for the second quarter of 2023-24, reflecting a 46 per cent year-on-year (Y-o-Y) fall. But this was the airline’s return to loss after posting a profit of Rs 197.6 crore during the previous quarter.
“The July-September quarter has historically been a challenging period for the aviation industry. This year, the challenges were further compounded by elevated fuel prices, impacting operational costs,” the airline’s chairman and managing director Ajay Singh said.
In a statement to BSE, the airline said it will issue 320 million shares and 130 million warrants to the 64 investors.
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They include Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher and Resonance Opportunities Fund for raising Rs 2,250 crore. The issue price will be Rs 50 per equity share/warrant.
Singh stated that this fundraise will strengthen the airline’s financial position, enhance its operational capabilities and help it settle outstanding dues. On Tuesday evening, the airline had a market cap of Rs 3,971 crore.
Singh and his related entities own 56.53 per cent shares in SpiceJet. And, it is unclear how their shareholding will change once the equity/warrant issuance to 64 entities is approved by the airline’s existing shareholders. The airline has been using various avenues to raise cash. In 2022-23, it raised Rs 449.8 crore under the central government's emergency credit line guarantee scheme (ECLGS). The airline has received an additional Rs 541.3 crore under the ECLGS in 2023-24, it said on Tuesday. The carrier also informed that it has received a non-binding term sheet from a potential investor and the airline is considering this avenue, too, to raise fresh capital.
It is currently operating about 1,430 flights per week, which are 23 per cent fewer services compared to a year ago, according to aviation analytics firm Cirium. SpiceJet has been posting annual losses since 2018-19. Last year, the airline saw a consolidated net loss of Rs 1,513 crore.
In August, Singh himself infused Rs 494.1 crore in the airline and his entities were issued fresh equity and warrants in return. A few days later, aircraft lessor Carlyle Aviation Partners acquired 5.91 per cent stake in the airline at Rs 48 a share. The lessor got the shares after converting its existing outstanding dues of $28.16 million.
Various aircraft and engine lessors have filed an insolvency application against SpiceJet at the National Company Law Tribunal (NCLT) over non-payment of dues. Credit Suisse and SpiceJet have been embroiled in a legal conflict since 2015, concerning outstanding debt of around $24 million. In August 2022, both parties informed the Supreme Court that they had come to an agreement.
In March this year, Credit Suisse initiated a contempt case against Singh and the airline. It asserted that they had not honoured their payment obligations as outlined in the settlement terms. In September, the airline paid $1.5 million to Credit Suisse following a Supreme Court directive. Singh’s dispute with Maran began in 2015 when the latter sold his 58.46 per cent stake in SpiceJet for a meagre Rs 2. In 2016, Maran took the matter to the Delhi High Court, alleging that the airline had breached its sale agreement by failing to issue him share warrants and preference shares.
In response, the court, in 2017, directed the airline to deposit Rs 579 crore and told both parties to resolve the matter through arbitration.
In 2018, an arbitration tribunal ruled in Maran’s favour, awarding him Rs 579 crore plus interest. On May 29 this year, the high court ordered SpiceJet to pay the interest of Rs 380 crore to Maran. On July 7, the SCrejected SpiceJet’s request for an extension to make the payment of Rs 380 crore to Maran and his company, Kal Airways. On July 10, Kal Airways firmly stated there was no possibility of an “amicable” settlement.
Kal Airways demanded that the airline adhere to the court’s order to pay the interest. SpiceJet paid Rs 100 crore owed to Maran.
