SpiceJet to issue 48.7 crore shares for ₹3,000 crore QIP
What's the story
SpiceJet, a leading budget airline in India, has announced its board's approval to issue approximately 48.71 crore equity shares at ₹61.60 each. This move is part of a Qualified Institutional Placement (QIP) strategy, aimed at raising ₹3,000 crore from eligible institutional buyers. The issue price includes a premium of ₹51.60 per share and is discounted by ₹3.19 from the floor price, as stated by the company in an exchange filing today.
Fundraising approval
Shareholders approve special resolution to raise funds
In a regulatory filing yesterday, SpiceJet disclosed that its shareholders have approved a special resolution to raise up to ₹3,000 crore. Following the equity share allotment in this issue, the company's paid-up equity share capital will increase from ₹7.94 crore (comprising 79.46 crore shares) to ₹12.81 crore (consisting of 128.16 crore shares). This marks a significant expansion in the airline's equity base.
Investor interest
QIP oversubscribed by Tata Mutual Fund, Discovery Fund
SpiceJet's ₹3,000 crore QIP has attracted significant investor interest, and was oversubscribed by key players such as Tata Mutual Fund and Discovery Fund. Family offices of prominent investors including Madhu Kela, Akash Bhanshali, Sanjay Dangi, and Rohit Kothari have also reportedly subscribed to the QIP. This strong investor response underscores confidence in SpiceJet's growth potential within India's burgeoning aviation market.
Fund allocation
Funds for statutory dues, fleet maintenance
SpiceJet intends to use the proceeds from this issue for several key objectives, aimed at stabilizing its financial health and resuming full operations. A significant portion of these funds, ₹601.5 crore, will be allocated toward settling statutory dues including TDS, provident fund, and GST obligations that have been delayed due to financial constraints.
Debt settlement
SpiceJet to allocate funds for outstanding liabilities, fleet expansion
SpiceJet plans to allocate ₹750 crore from the raised funds toward settling outstanding liabilities owed to creditors, such as aircraft and engine lessors, engineering vendors, and financiers. An additional ₹410 crore will be used for ungrounding and maintaining the existing fleet, while ₹370 crore is earmarked for new fleet induction.
Dues clearance
SpiceJet to clear employee dues, airport payments
SpiceJet has also set aside ₹118.9 crore for clearing employee dues and ₹150.3 crore for settling airport-related payments. As of June 2024, the airline employed 7,824 full-time staff members. This move is part of the company's broader strategy to improve its financial health, and ensure smooth operations amid challenging market conditions in the aviation sector.