₹5bn to invest for India’s SpiceJet
To enhance the airline’s financial condition and maximize expansion potential, SpiceJet’s promoter and managing director have decided to put INR5 billion (USD61 million) into the under-pressure company. The airline would be able to access an additional INR2.06 billion (USD25.1 million) thanks to Ajay Singh’s equity contribution thanks to the Emergency Credit Line Guarantee Scheme of the Indian government.
Singh put the finding on the table at a July 12 SpiceJet board meeting held on discuss options for raising fresh capital. “The infusion of fresh capital will substantially strengthen the company’s financial position and is a powerful vote of confidence in its future and long-term viability,” reads a SpiceJet statement on the matter.
The statement says that Singh will receive equity shares and/or convertible securities/equity share warrants on a preferential basis, in one or more tranches at a still-to-be-determined price, subject to regulatory approvals.
Singh confirmed the offer. “SpiceJet has a bright future, and I am committed to helping it achieve its full potential. This investment will allow the airline to accelerate its growth plans, capture new opportunities in the market, and grow its revenue and profits. We are committed to building a sustainable and profitable business, and this investment is a reflection of that commitment,” he said.
Singh’s investment is the latest chapter in a turbulent year for the low-cost carrier. SpiceJet is facing multiple bids by lessors to have it declared insolvent. Last week, an exasperated Supreme Court denied it further time to pay former promoter Kalanithi Maran INR3.8 billion (USD456.32 million) in accrued interest payments connected to a 2015 transaction gone sour. Concurrently, there are reports in Indian media, denied by SpiceJet, that India’s Directorate General of Civil Aviation had placed the airline under “enhanced surveillance” several weeks ago over concerns about its financial stability.