Last week, SpiceJet, facing financial difficulties, revealed that it had received a lifeline in the form of investments totaling Rs 2,254 crore from a group of funds and high net worth individuals.This investment will be made through the issuance of up to 130 million convertible warrants and 320.8 million fresh equity shares.
Upon approval from shareholders, promoter Ajay Singh‘s current shareholding in the airline will decrease from 56.49% to at least 38.55%. As of now, 37.9% of Singh’s stake is pledged with various banks.Harihara Mahapatra and his wife are the promoters of Mahapatra Universal Limited, a group based in Mumbai. Their company operates in various sectors such as real estate, infrastructure, consulting, consumer, and retail, according to the company’s website.
In 2016, Preeti Mahapatra contested as an independent candidate in the Rajya Sabha election with the support of the Bharatiya Janata Party against Congress leader Kapil Sibal.
The funds raised, amounting to Rs 2,241.5 crore, will be utilized by SpiceJet for various purposes. These include the payment of statutory obligations such as Tax Deducted at Source (TDS), Goods and Services Tax (GST), Provident Fund (PF), settling past dues with creditors, getting grounded planes back in service and acquiring new aircraft, paying for aviation turbine fuel, compensating employees, and supporting general corporate activities.
Ajay Singh stated that this investment will enable SpiceJet to increase its capacity, reduce liabilities, and lower the cost of capital. He expressed confidence that it will also reassure lessors and vendors. Singh further mentioned that the capital infusion will put the airline in a more stable position.
SpiceJet is planning to initiate discussions with Boeing for the resumption of new 737 Max aircraft induction. The airline has more than 200 of these aircraft on order.
SpiceJet has been relying on capital from its partners, which comes at a high cost. It also has unpaid statutory dues, including TDS and other taxes, which accrue interest over time. Singh highlighted that this fundraising will enable the settlement of these dues, significantly reducing the interest burden.
Sources revealed that SpiceJet currently has short-term liabilities amounting to Rs 6,000 crore, with a substantial portion consisting of statutory dues worth Rs 550 crore and liabilities to aircraft lessors totaling around Rs 4,200 crore. Singh added that the equity infusion will facilitate further restructuring.
