SpiceJet board approves Rs. 2,254cr fundraising plan
What's the story
On Tuesday, SpiceJet's board approved a plan to raise Rs. 2,254 crore by issuing up to 13 crore convertible warrants and 32.08 crore fresh equity shares at an issue price of Rs. 50 each.
The low-cost airline has been grappling with a cash crunch, causing only a portion of its fleet to be operational.
The issue price is 13.85% lower than SpiceJet's stock price of Rs. 58.04 when markets closed today.
Details
Who are the allottees?
The convertible warrants will be issued to 64 allottees, including Prabhudas Lilladher Advisory Services, LKP Finance, Martina Developers, and Fincon.
After announcing its fundraising plans and second-quarter financial results, SpiceJet's shares dropped 9.7% from Rs. 61.49 to Rs. 55.30 on December 12, before settling at Rs. 58.04 on BSE.
The airline's market capitalization is nearly Rs. 4,200 crore, with promoters led by Ajay Singh holding a 56.5% stake in the company.
What Next?
SpiceJet has been facing a cash crunch
SpiceJet has experienced a cash crunch due to legal cases involving non-payment of dues by its former promoters and aircraft lessors.
In July, the company announced that Singh would infuse Rs. 500 crore in exchange for fresh equity shares or convertible instruments or both.
The improving profitability of India's aviation sector and the bankruptcy-led exit of Wadia Group's budget carrier Go First have enhanced SpiceJet's ability to repay debt and manage finances.
Insights
Will more cash infusion revive SpiceJet?
In August, Singh invested Rs. 500 crore into the company, stating, "I firmly believe in the potential of our airline, and I am pleased to have contributed to its growth by infusing Rs. 500 crore into the company."
"This infusion will help bolster our efforts to revive our grounded planes, for which we have been working tirelessly, strengthening our fleet and expanding our cargo operations."
Despite challenges, SpiceJet's stock has risen around 70% in the past six months.
Details
SpiceJet swings back to losses after a profitable Q1
SpiceJet, after a profitable Q1 in FY24, faced a net loss of Rs. 431.54 crore in Q2.
This contrasts with a net loss of Rs. 837.8 crore during the same period last year.
The airline reported a net profit of Rs. 197.53 crore in Q1 FY24.
Despite increased domestic travel demand for three consecutive quarters, revenue dropped by 27% to Rs. 1,425.29 crore from Rs. 1,952.61 crore in the prior year's Q2.