Low-cost carrier SpiceJet on Wednesday said its promoter Ajay Singh has decided to infuse Rs 500 crore into the loss-making airline, by way of subscribing fresh equity shares and/or convertible instruments.
“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. It marks a pivotal moment in SpiceJet’s journey towards sustained growth and long-term success,” Spicejet said in a statement.
The company’s board of directors, which met on July 12, 2023, considered options for raising fresh capital for the Company where Ajay Singh, promoter of the company, in order to strengthen the financial position of the company, offered to infuse Rs 500 crore.
“The board deliberated on the matter and agreed to issue equity shares and/or convertible securities/equity share warrants on preferential basis to the promoter and/or the promoter group of the company, on a preferential basis, in one or more tranches at an issue price to be determined in accordance with the SEBI ICDR Regulations for an amount of Rs 500 Crore subject to the approval(s) of the shareholders of the company, the Securities and Exchange Board of India and/or any other competent authorities and such other approvals, consent, etc. as may be required in this regard,” according to the statement.
With this fund infusion by the promoter, SpiceJet will be entitled to additional credit facilities of Rs 206 crore under the Emergency Credit Line Guarantee Scheme.
Ajay Singh, chairman and managing director of SpiceJet, said, “I am pleased to announce that I will infuse Rs 500 crore into the company. 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 and capture new opportunities in the market, grow its revenue and profits. We are committed to building a sustainable and profitable business, and this investment is a reflection of that commitment.”
Singh said he is confident that SpiceJet, which has served passengers for over 18 years, will succeed in the long term and “I am excited to be a part of this journey”.
The airline is already utilising $50 million ECLGS funds that it has already received and its own cash to revive its grounded aircraft. Two of the grounded aircraft, a Boeing 737 and a Q400, have been operationalised so far and more planes are expected to re-join the fleet soon.
On Wednesday, during the intraday trade, shares of SpiceJet fell as much as 11 per cent before recovering and close in the green. The temporary share crash happened after reports surfaced that aviation watchdog DGCA has put the company under “enhanced surveillance” as the airline faces multiple financial headwinds in recent months.
The DGCA move comes against the backdrop of various lessors seeking repossession of aircraft leased to SpiceJet and some of the cases have been settled by the airline.
Shares of Spicejet on Wednesday finally closed higher by 4.39 per cent or Rs 1.31 to Rs 31.16 apiece on the BSE.
SpiceJet has been making losses since 2018-19. It incurred a consolidated net loss of Rs 302 crore in FY2018-19, Rs 937 crore in FY2019-20, Rs 1,030 crore in FY2020-21, and Rs 1,744 crore in FY2021-22.
The airline has delayed the announcement of its financial results for fiscal 2022-23 as a key member of its audit committee is medically incapacitated, Spicejet has said in an exchange filing.
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