Ajay Singh, the promoter of SpiceJet, is currently engaged in talks with various global private credit funds to secure a substantial fund infusion of up to $100 million. This financial move intends to primarily refinance a portion of the existing promoter debt while potentially facilitating fresh equity injections into the airline, sources familiar with the negotiations disclosed to Moneycontrol under the condition of anonymity.
These discussions involve multiple global funds and predominantly revolve around structuring a credit transaction, with negotiations emphasizing the loan’s pricing and terms. Although the talks remain in preliminary phases, the evolving profitability within India’s aviation industry, coupled with the recent exit of Wadia Group’s GoFirst due to insolvency, augur well for SpiceJet’s financial viability and debt management.
In response to these developments, a spokesperson for SpiceJet refrained from commenting, citing the airline’s policy against market speculation.
Recent market data reveals SpiceJet’s marginal expansion in market share, surpassing Akasa Air, alongside an overall surge of 30 percent in passenger traffic compared to the previous year, observed in August.
Presently, SpiceJet’s promoters, spearheaded by Ajay Singh, who serves as the Chairman and Managing Director, collectively hold a 56.5 percent stake in the company, with 37.9 percent of that pledged as collateral with various lenders.
The airline exhibited a turnaround in its financials for the first quarter of FY24, reporting a standalone net profit of Rs 204.56 crore, marking a notable shift from the Rs 788.83 crore net loss during the same quarter in the preceding fiscal year. However, the company is yet to disclose its financial performance for the second quarter. The stock price has shown a remarkable rally of approximately 70 percent over the past six months.
Amid these financial maneuvers, SpiceJet faces pressing legal battles related to non-payment of dues, involving former promoters and aircraft lessors. The company aims to address these challenges by exploring avenues for a much-needed cash infusion. In July, Ajay Singh pledged an infusion of Rs 500 crore through fresh equity shares or convertible instruments.
Ongoing legal cases against SpiceJet, including a lessor’s attempt to execute a UK court decree seeking Rs 90 crore, underscore the urgency for financial stability. Ajay Singh’s recent summons by the Delhi High Court over alleged non-payment of dues to former SpiceJet promoters further adds to the legal entanglements.
Aviation consultancy firm Capa’s recent report predicts domestic and international passenger traffic to reach around 155 million and 70 million, respectively, for the current financial year. Despite capacity constraints, the report indicates a marginal year-on-year dip of approximately 3 percent in full-year passenger yields.
As discussions unfold between Ajay Singh and global credit funds, SpiceJet navigates a critical juncture seeking financial restructuring to fortify its standing in India’s aviation landscape.
Sources By Agencies