The agreement allows restructuring of certain aircraft lease obligations of SpiceJet aggregating to $137.68 million which upon settlement/waivers will be adjusted to $97.51 million.
Carlyle will also consider purchasing a stake in SpiceXpress & Logistics Private limited, the cargo arm of the company via compulsorily convertible debentures.
The leasing firm which has the largest exposure among other lessors of around 8 Boeing 737 has valued the airline’s share at Rs 100 per equity share. This is at a significant premium than the current share price of the airline which closed at Rs 61.46 on the Bombay Stock Exchange, or 2.4% lower, on Friday.
Spicejet didn’t elaborate on the amount of stake Carlyle will get. This is the second such settlement between the airline and the lessor. Last year, the lessor had converted around $28 million into a stake of around 5.9%.The airline is holding roadshows to raise around Rs 2,500 crore through a share sale to institutional investors. The share sale if successful will dilute promoter Ajay Singh’s share by more than 10%. It has appointed ICICI Securities and JM Financial and DAM Capital to manage the fundraising process While the airline had earlier announced plans to raise about Rs 2,250 crore from a group of 64 investors, it could only raise Rs 1,060 crore, as one of the primary investors eventually backed out.
SpiceJet has been facing a host of issues due to inability to raise fresh capital. The airline has been defaulting on lease rental payment forcing aircraft lessors to move insolvency court against the airline. The airline’s current outstanding lessor and engineering liabilities have risen to Rs 3,700 crore, while statutory dues amount to Rs 650 crore.
The airline desperately needs cash to salvage operations but multiple attempts at fundraising have remained futile so far. It has defaulted on paying vendors, including aircraft lessors, some of whom have filed petitions in court to declare the airline bankrupt.
The airline’s market share has dropped below 4% with less than 20 operational aircraft, as 36 planes stay grounded due to non-availability of engines and spare parts.
The airline is telling investors that it has access to prime domestic and international destinations and the fundraising will allow it to unground planes. “ “Liability settlement and restructuring with existing lessors will lead to fleet induction while investment on ungrounding of the current fleet will enhance the fleet significantly,” the airline said in a presentation to the investors.