Low-cost carrier SpiceJet Ltd said Carlyle Aviation now holds a 7.5% stake in the airline after converting $100 million of outstanding dues into equity. Carlyle also acquired compulsorily convertible debentures in SpiceXpress, the airline’s cargo arm.
SpiceJet said it now plans to hold discussions with other lessors to further deleverage its balance sheet. Smaller airlines were dealt a severe blow during the pandemic, as the government grounded planes and imposed travel restrictions. Without significant cash reserves, these airlines faced unprecedented challenges, having to bear the brunt of fixed costs like lease payments, salaries, and maintenance expenses without any revenues. However, with restrictions now lifted and travel demand rebounding, there is a glimmer of hope for these struggling carriers.
On Monday, SpiceJet said its board also approved the issuance of new shares worth $29.5 million or ₹244.28 crore to Carlyle Aviation Partners at ₹48 per share or based on the price determined by the market regulator’s formula, whichever is higher.The board also approved a proposal to transfer compulsorily converted debentures (CCDs) of SpiceXpress and Logistics Pvt. Ltd, held by SpiceJet aggregating to $65.5 million to Carlyle Aviation, subject to regulatory approvals. The CCDs will be converted into equity shares of SpiceXpress at an anticipated future valuation of $1.5 billion or ₹12,422 crore, the airline said. These transactions will reduce the total debt of SpiceJet by $100 million.
Mint reported on 23 February that under the proposed deal, Carlyle would convert around 75% of dues into CCDs in SpiceXpress.
The airline’s total liabilities were at about ₹14,000 crore till December 2022, and the airline has said it will engage with lessors too to reduce these liabilities. “The transaction will substantially deleverage our balance sheet, thereby allowing us to access fresh funds at a competitive rate, and we aim to follow suit with other lessors as well in the near term," said Ajay Singh, chairman and managing director of SpiceJet.As part of a plan to raise funds to finance growth plans, the board has also sought shareholders’ approval to raise fresh capital of up to ₹2,500 crore or $301.9 million through an issue of securities to qualified institutional buyers. The airline had also said last week that it has received about ₹211 crore under the Emergency Credit Line Guarantee Scheme and is in the process of getting another ₹764 crore.
Under another restructuring exercise with aircraft lessors, the company board has also given in-principle approval to the airline to acquire two Boeing 737-800 planes by buying the entire share capital of leasing company AS Air Lease 41 Ltd from its affiliate company CLSEC Holdings 10 DAC.
With this, the airline will now own 15 aircraft, including 13 Q400s and 2 Boeing 737 planes. According to the flight tracking website flightradar24, the airline currently has 65 aircraft in its fleet, but the operational fleet is around 40 planes.
Shares of SpiceJet Ltd were trading 6% lower at ₹37.50 a piece in mid-day trade on BSE on Tuesday.
