Exclusive: Spicejet promoter Ajay Singh in talks with credit funds to raise $100 million

For the first quarter of FY24, the low-cost airline reported a standalone net profit of Rs 204.56 crore in the quarter ending June 2023 as against a net loss of Rs 788.83 crore in the same quarter last fiscal

SpiceJet promoter Ajay Singh is in discussions with a clutch of global private credit funds to raise up to $100 million to refinance part of promoter debt and potentially infuse fresh equity in the cash-strapped airline, sources aware of the ongoing negotiations told Moneycontrol requesting anonymity.

“Several global funds are in discussions and talks are currently focussed around the pricing of the loan, which is likely to be structured credit transaction,” one of the persons cited above.

The talks are currently at a fairly early stage with no certainty of a transaction, but the improving profitability of India’s aviation sector coupled with the bankruptcy-led exit of Wadia Group’s budget carrier GoFirst has improved SpiceJet’s prospects to repay debt and manage finance.

A SpiceJet spokesperson said the airline does not comment on market speculation.

In August, SpiceJet increased its market share narrowly beating Akasa Air, which saw an overall jump in passenger traffic by 30 percent compared to the year before.

Currently, SpiceJet promoters led by Singh, who is also the Chairman and Managing director of the airline hold 56.5 percent stake in the company of which 37.9 percent is pledged with various lenders.

For the first quarter of FY24, the low-cost airline reported a standalone net profit of Rs 204.56 crore in the quarter ending June 2023 as against a net loss of Rs 788.83 crore in the same quarter last fiscal. The airline is to report its financial numbers for the second quarter. The stock price of the company has rallied by around 70 percent in the past six months.

The budget carrier is currently in urgent need of cash infusion, owing to a number of legal cases it is facing with regard to non-payment of dues, including the airline’s former promoters as well as aircraft lessors. In July, the company said that Ajay Singh would infuse Rs 500 crore in lieu of fresh equity shares or convertible instruments or both.

In one of the ongoing court cases, one of SpiceJet’s lessors moved the Delhi High Court to execute a decree it obtained in the United Kingdom in June 2023 against the airline, Moneycontrol reported on November 21. In the latest case, the lessor is seeking to recover an amount of Rs 90 crore from SpiceJet by executing the judgment of the UK court. The HC has sought the airline's response to the plea and the case is likely to come up for hearing in February.

Ajay Singh was recently summoned by the Delhi High Court over alleged non-payment of dues to former SpiceJet promoters led by Kalanidhi Maran. Maran alleged that SpiceJet had to pay Rs 440 crore to then towards interest arising out of dues from an arbitral award. Maran’s lawyers told the court that SpiceJet last made a payment of Rs 100 crore in September and has not made any further payments.

In a recent report aviation consultancy firm Capa has said that domestic and international passenger traffic is expected to reach around 155 million and 70 million, respectively, for the current financial year. Despite capacity shortages, the research firm noted that full-year passenger yields are projected to be approximately 3 percent lower year-on-year.