What SpiceJet's Financial Restructuring Plan Will Mean For Its Equity
Upon its conversion of debt into equity, the overall promoter stake will reduce to nearly 45% from 47.79% at present.
SpiceJet Ltd. has announced a financial restructuring plan with Carlyle Aviation, which would reduce the net debt of the company by nearly Rs 336 crore. The current outstanding dues of the company stand at over Rs 4,300 crore.
The low-cost carrier has entered into a term sheet with Carlyle Aviation to restructure certain aircraft lease obligations aggregating to $137.68 million (nearly Rs 1,157 crore) as of June 30, 2024, which upon settlement/waivers, will be adjusted to $97.51 million (nearly Rs 820 crore).
Upon its conversion of debt into equity, the overall promoter stake will reduce to nearly 45% from 47.79% at present.
Shares of SpiceJet Ltd. are currently trading at a discount of nearly 40% from Carlyle Aviation’s valuation of Rs 100 per share for the debt restructuring plan.
The airline's overall outstanding debt of over Rs 4,300 crore includes Rs 3,700 crore of dues towards lessor and engineering liabilities, in addition to the statutory dues of Rs 650 crore, according to a corporate presentation released by the company on Sept. 6.
The company is also planning to raise Rs 2,500 crore through the qualified institutional placement. The airline already has an approval from the board of directors to raise up to Rs 3,000 crore through QIP. It also plans to raise up to Rs 736 crore from the issue of warrants to promoters.
SpiceJet had placed 150 cabin crew members on a temporary three-month furlough amid reports of financial crisis in August. The troubled airline attributed this decision to the lean travel season and a reduced fleet size, with the aim of ensuring long-term stability.
"As we work toward enhancing our fleet following the upcoming Qualified Institutional Placement, we look forward to welcoming our crew members back to active duty," the airline's spokesperson said.
Furloughs are temporary, forced leaves of absence where employees retain their jobs but are unpaid. Employees keep their benefits during furloughs and anticipate return to work within a certain time.
SpiceJet is currently facing crisis and Civil Aviation Ministry is keeping a close watch on the situation, Civil Aviation Minister, K Rammohan Naidu, told the reporters earlier today.
We want as many airlines as possible to operate in India because of high demand in the country, said Naidu.
