Cash-strapped airline SpiceJet got a lifeline as a clutch of funds and high net worth individuals will invest Rs 2,254 crore through the issue of up to 130 million convertible warrants and 320.8 million fresh equity shares.
The fundraising counts 64 investors amongst which there are funds like Elara India Opportunities Fund, Aries Opportunities Fund, and Prabhudas Lilladher, Nexus Global and Mumbai based businessman Harihara Mahapatra and Arjun Juneja of Mankind Pharma.
The shares will be issued at Rs 50 per piece whereas the airline’s shares were trading at Rs 58.04 at the closing of market hours on Tuesday.
“Airline business is booming in India. Traffic growth is phenomenal. A sizable infusion at this stage in the airline can not only revive it but also help it to increase its market share. SpiceJet needs new aircraft and upgradation of existing fleet which will not only increase its revenue but also reduce its cost. Both of these are possible now. Every new plane available from Boeing. Every plane releases sale and leaseback income which also increases liquidity,” said Amisha Vora, chairperson & MD of Prabhudas Liladher group.
SpiceJet promoter Ajay Singh, holds 56.5 % stake in the company, and, out of this, 37.9 % is pledged with various banks. After the transaction Singh will still be the largest stakeholder in the company with 45% stake. There will be no change.
“The proposed fund infusion will go a long way in enhancing the product presence and market reach of SpiceJet and will also provide a deep financial foundation. The capital raised will be instrumental in funding operational expansion initiatives, including fleet enhancement, route network expansion, and technological advancements,” the airline said.
Singh said that the investment will help the airline to induct fresh capacity and reduce liabilities, thereby reducing cost of capital. “It helps us to induct fresh capacity, settle some liabilities which we accrued during Covid. This will also give confidence to lessors, vendors,” he said, adding that the capital raised will put the airline in a comfortable position.
SpiceJet will soon start discussion with Boeing for resuming induction of new 737 Max aircraft of which it has more than 200 on order.
SpiceJet has been taking capital from its partners which has a high cost of capital. It also has unpaid statutory dues like TDS and other taxes due to which it accrues interest. “ This fundraising will help us to settle that which will significantly reduce the interest burden,” Singh said.
Sources said that SpiceJet has a short term liability of Rs 6000 crore out of which bulk portion is statutory dues of Rs 550 crore and lessor liability of around Rs 4,200 crore. Singh said that the equity infusion will also help them to further restructure it.
