SpiceJet Looking To Raise $100 Million; Ajay Singh In Talks With Global Credit Funds: Report

The funds would be used in refinancing a portion of promoter debt and potentially inject fresh equity into the cash-strapped airline

SpiceJet's urgent need for cash infusion reportedly stems from legal cases and non-payment of dues, including issues with former promoters and aircraft lessors.

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Ajay Singh, promoter of SpiceJet, is reportedly in talks with global private credit funds to secure up to $100 million, a report by MoneyControl said. According to the report, the funds would be used in refinancing a portion of promoter debt and potentially inject fresh equity into the cash-strapped airline. The discussions are in early stages and are focusing on loan pricing for a potential structured credit transaction, Moneycontrol said citing sources privy to the development.

The urgent need for cash infusion reportedly stems from legal cases and non-payment of dues, including issues with former promoters and aircraft lessors. SpiceJet faces challenges such as legal cases from lessors and non-payment of dues to former promoters, highlighting its need for financial support.

Ajay Singh in July had committed to infusing Rs 500 crore through fresh equity shares or convertible instruments. Singh holds 56.5 per cent stake in the airline, of which 37.9 per cent has been pledged with various lenders.

Earlier this month, he had also been summoned to the Delhi High Court and was ordered to make a payment to its former owner Kalanithi Maran, over money owed. Maran's legal team claimed that SpiceJet owed them Rs 440 crore in interest arising from the arbitral award and that the airline had only paid them Rs 100 crore of the Rs 380 crore it had been ordered to.

In response, SpiceJet told the Delhi High Court that it was "struggling to stay afloat" following the HC's payment order.

Despite financial constraints, the low-cost carrier posted a net profit of Rs 204.56 crore in the first quarter of the ongoing financial year (Q1FY24). This marked a turnaround from the net loss of Rs 788.83 crore in the same quarter last financial year.

Capa, an aviation consultancy firm, also projects domestic and international passenger traffic to reach around 155 million and 70 million, respectively, for the current financial year, with passenger yields expected to be approximately 3 per cent lower year-on-year.

Shares of SpiceJet closed at Rs 44.81 apiece, up 2.59 per cent on the BSE on Tuesday.