SpiceJet Bolsters Finances with New Capital Injection Amid Legal Resolutions
SpiceJet, the Indian low-cost carrier based at Delhi International, has successfully secured additional funding through the issuance of equity shares and warrants to various investors, signaling a strategic move to strengthen its financial standing. This capital raise comes as the airline navigates through legal challenges, including mandates to settle outstanding debts to Engine Lease Finance and Credit Suisse.
In a significant financial move detailed in a Bombay Stock Exchange filing on February 22, 2024, SpiceJet announced the allotment of 40,100,000 equity shares at an issue price of INR50 (USD0.60) each. Aries Opportunities Fund Limited and Payal Nitin Magiya were the primary beneficiaries of this allotment, with Aries receiving the lion’s share of 40 million shares. Additionally, the airline’s board approved the issuance of 23,100,000 warrants, convertible into an equivalent number of equity shares, to four entities including Elara India Opportunities Fund Limited, Jyoti Gupta, Mayur Gupta, and Arunim Purkayastha.
This latest funding initiative follows a previous issuance of equity shares and warrants totaling INR7.44 billion (USD89.8 million) and forms part of SpiceJet’s broader strategy to amass INR22.5 billion (USD271.5 million) through similar financial instruments. Ajay Singh, Chairman and Managing Director of SpiceJet, highlighted the investment of INR10.6 billion (USD127.9 million) as a testament to the investors’ confidence in the airline’s growth trajectory and a boon to its future financial health and expansion plans.
Parallel to these financial developments, SpiceJet has been addressing legal disputes related to its financial obligations. The Supreme Court of India ruled on February 19, 2024, that SpiceJet must pay USD1.25 million to Credit Suisse by March 15, concluding a decade-long maintenance, repair, and overhaul (MRO) payment conflict. This decision underscored the airline’s financial capability to settle existing debts, as evidenced by its attempt to acquire Go First.
Furthermore, on February 22, 2024, the Delhi High Court directed SpiceJet to return an engine to Engine Lease Finance BV by March 10, emphasizing the airline’s responsibility for the engine’s return without further delay. The ruling stemmed from a breakdown in settlement talks over maintenance costs, with Engine Lease Finance insisting on SpiceJet’s liability for the engine’s serviceability.
These legal outcomes not only highlight SpiceJet’s ongoing efforts to manage its financial and operational challenges but also its commitment to adhering to judicial mandates. As SpiceJet secures fresh capital and resolves its legal disputes, the airline is poised to reinforce its position in the competitive aviation market, with a clear focus on enhancing operational capabilities and pursuing strategic growth opportunities.