Low-cost carrier Spicejet has sought the approval of shareholders to allow Carlyle Aviation Partners to convert a portion of its dues into a 5.9% stake in the airline at `48 per share. Carlyle, which is Spicejet’s biggest lessor had indicated its intent to convert some of its dues into equity shares and Compulsorily Convertible Debentures (CCD).
In a notice to the stock exchanges, the airline said it proposes to issue and allot up to 48.1 million shares, of Rs 10 face value , upon conversion of outstanding dues for an amount not exceeding $28.16 million to nine entities.
Following the announcement to the exchanges, the Spicejet stock rose 7.2% in Wednesday’s session and closed at Rs 31.42 on the Bombay Stock Exchange. The placement of shares to Carlyle will thus be made at a premium of around 55%.
Spicejet also proposed to offer, issue and allot up to 34.1 million shares on a preferential basis to Spice Healthcare Private, an entity under the promoter group. The price will be fixed in accordance with the Sebi regulations. Also, up to 131.5 million warrants will be offered to Spice Healthcare Private Limited. Spicejet promoter Ajay Singh had said recently he would be infusing `500 into the airline by way of subscribing to fresh equity shares and or convertible instruments.
The conversion of dues into equity will bring the troubled carrier some relief. With the price of crude oil nudging $86 and the cost of aviation turbine fuel going up, the no-frills carrier’s problems are mounting at a time when it is losing market share. Data from DGCA shows Spicejet’s market share fell from 5.4% in May to 4.4% in June. Moreover, the airline’s PLF decreased by 170 bps to 93.1% in June. IndiGo, on the other hand, saw its market share rise from 61.4% in May 23 to 63.2% in June. SpiceJet has not filed its financial results for the March quarter and the June quarter.