SpiceJet's promoter Ajay Singh is in talks to secure $100 million, aiming to restructure debt and bolster the airline's finances
Ajay Singh, the promoter of SpiceJet, is in talks with several international private credit funds to secure up to $100 million, as per a report by moneycontrol. The purpose of this fundraise is to restructure a portion of the promoter's debt and potentially inject new equity into the financially strained airline.
While the discussions are in the preliminary phase, the outcome of a transaction remains uncertain. However, the aviation sector in India is experiencing enhanced profitability, and the exit of Wadia Group's budget carrier, GoFirst, due to bankruptcy has bolstered SpiceJet's potential to repay debts and effectively handle its financial situation.
At present, the ownership of SpiceJet is primarily held by its promoters, led by Singh, who serves as the Chairman and Managing Director of the airline. He own a 56.5 per cent stake in the company, with 37.9 per cent of this ownership pledged as collateral with different lenders.
In response to numerous legal cases surrounding unpaid dues, including those involving the airline's former promoters and aircraft lessors, the budget carrier urgently requires an injection of funds. It was disclosed in July that Ajay Singh plans to contribute Rs 500 crore through the issuance of fresh equity shares, convertible instruments, or a combination thereof.
Earlier, SpiceJet was also caught in a legal dispute concerning the execution of a 2018 arbitral decision that mandated the airline to pay Rs 579 crore along with interest to Maran and KAL Airways.
On a year-to-date basis, the shares of Spicejet have witnessed a surge of 15 per cent or 5 points on the Bombay Stock Exchange.