Investors could seek open-offer waiver from Sebi for about a 25% stake
In a reprieve for troubled low-cost carrier SpiceJet, the government has decided to extend the credit period for its dues to state-run Airports Authority of India till the end of January, after the airline gives a revival plan with details of fresh investment on Thursday, say senior civil aviation ministry officials.
The carrier is also expected to give an investment plan to the Securities and Exchange Board of India, with new investors, led by founder-promoter Ajay Singh, seeking a waiver from an open offer.
Industry sources said Ajay Singh, along with private equity investor JP Morgan, was expected to acquire stake of about a 25 per cent in SpiceJet and pump in about Rs 600 crore (Rs 6 billion) to revive the airline.
At Wednesday’s closing share price of Rs 18.10 on BSE, 25 per cent stake is worth Rs 242 crore (Rs 2.42 billion).
“The stake sale deal has largely been agreed to and is close to being signed by the stakeholders.
“Once we are sure the funds are coming, we will extend the credit period for AAI dues to January-end.
“The government does not want to be seen as doing any more to help a private company,” said a ministry official.
The airline, whose top management, including chief operating officer Sanjiv Kapoor, held talks with ministry officials on Wednesday, will give details of the stake sale by majority shareholder Kalanithi Maran to the new investors.
Maran holds a 53.48 per cent stake in the airline, both directly and through KAL Airways.
A second official said, “SpiceJet has said it will submit the investment plan tomorrow (Thursday). It will also submit the plan to Sebi.”
Sources privy to the development said Maran was being asked to take care of a part of the liabilities.
In all, SpiceJet has dues worth about 1,400 crore (Rs 14 billion), including Rs 300 crore (Rs 3 billion) to AAI and private airport operators and about Rs 700 crore (Rs 7 billion) to aircraft lessors.
The airline also owes money to vendors such as catering service and aircraft maintenance providers.
So far, SpiceJet has secured several extensions to clear its dues to AAI, though the airports operator has asked it to start making part payments from this week.
For jet fuel, the carrier is making daily payments to oil marketing companies such as Bharat Petroleum, IndianOil, Shell and Reliance.
In the next few weeks, the airline is laying off about 1,000 employees, across functions, to cut costs. It has already cut its Boeing 737 fleet to 17 from 35 in July last year. The carrier has also delayed salary payments for December.
SpiceJet’s accumulated losses stand at about Rs 3,000 crore (Rs 30 billion), with negative net worth of about Rs 1,500 crore (Rs 15 billion).
BURDENS APLENTY
SpiceJet’s total liabilities Rs 1,400 crore (Rs 14 billion)
The break-up
- Rs 200 crore (Rs 2 billion) to AAI
- Rs 100 crore (Rs 1 billion) to private airports
- Rs 700 crore (Rs 7 billion) to lessors
- Rs 400 crore (R s4 billion) to MRO, other vendors
