SpiceJet Chairman Ajay Singh likely to sell more than 10% stake to raise funds amid financial woes

SpiceJet Ltd's Chairman and Managing Director, Ajay Singh, is likely to offload more than a 10 per cent stake in the airline operator as a part of its latest funding round expected to close by the end of September, according to people familiar with the development, reported the news agency PTI on Sunday, September 8.

The budget airline operator facing several challenges, including financial crisis, legal battles, and grounding of aircraft. The company is looking to raise funds to help meet its various financial obligations, according to the report. 

SpiceJet Ltd shares closed 2.43 per cent lower at ₹61.46 after Friday's market close, compared to ₹62.99 in the previous market close. 

Singh may offload up to 15 per cent stake in the company if certain conditions are fulfilled, according to one of the sources cited in the report. Singh would be selling a 10 per cent stake in the airline operator as the quantum of funds could go up, according to another source quoted in the report.

For the suggested Qualified Institutional Placement (QIP), there is a commitment for up to ₹2,000 crore and the airline is in discussions with potential investors. Meetings have been held both in India and abroad, as per the sources cited in the agency report.

SpiceJet did not comment on the development, according to the agency. The funding round is expected to be over by the end of September, said the report.

The promoter group has a little over 47 per cent stake in the company as of June end, 2024, according to the report quoting BSE data. The company is currently operating a 20 aircraft fleet compared to a 74 aircraft fleet in 2019, said the report. 

SpiceJet's fundraising plan:

On September 6, SpiceJet said it has plans to raise little more than ₹3,200 crore from a QIP, warrants, and capital infusion by the promoter, reported the agency quoting the airline's presentation.

“Spicejet plans to raise ₹2,500 crore through QIP and ₹736 crore through previous warrants and promoter infusion, the airline said in an investor presentation,” the company said in the investor presentation, reported the agency.

SpiceJet aims to use to funds to take back the grounded fleet in operations, use the money for debt settlement, new fleet induction and other purposes, as per the report.

In January, the airline could raise only ₹1,060 crore through a preferential share issue against its ₹2,250 crore funding plan announced in December 2023, according to the report.