SpiceJet’s share price jumps over 6% to intraday high of Rs 70.50 on NSE following the announcement that its board has approved the issuance and allotment of approximately 48.71 crore equity shares to eligible qualified institutional buyers.
Aimed at raising Rs 3,000 crore at an issue price of Rs 61.60 per share. This issue price includes a premium of Rs 51.60 per unit and a discount of Rs 3.19 from the floor price.
Increase in Paid-Up Equity Share Capital
According to a filing to the exchanges, the allotment will increase the company’s paid-up equity share capital from Rs 7,94,67,27,170, consisting of 79,46,72,717 equity shares, to Rs 12,81,68,57,030, consisting of 1,28,16,85,703 equity shares.
The airline had received shareholder approval for the special resolution to raise up to Rs 3,000 crore in a regulatory filing on Friday.
Funding Allocation for Financial Stability
The proceeds from this equity issue are intended for several critical objectives aimed at stabilizing SpiceJet’s financial health and resuming full operations. A primary goal includes settling statutory dues totaling Rs 601.5 crore, which encompasses obligations for Tax Deducted at Source (TDS), provident fund contributions, and Goods and Services Tax that have been delayed due to financial constraints.
Settlement of Outstanding Liabilities and Fleet Maintenance
Additionally, Rs 750 crore will be allocated to settle outstanding liabilities owed to creditors, including aircraft and engine lessors, engineering vendors, and financiers. The airline plans to invest Rs 410 crore in “ungrounding and maintenance” of its existing fleet.
While Rs 370 crore is earmarked for new fleet induction, which involves purchasing components, spare parts, and repairs to bring grounded aircraft back into service, as well as acquiring new aircraft through various leasing models.
Employee Dues and Airport Payments
Further, SpiceJet intends to use Rs 118.9 crore for payment of employees’ dues and Rs 150.3 crore for airport-related payments. As of June 2024, the airline employs 7,824 full-time staff.
Operational Challenges and Share Price Decline
SpiceJet’s operational challenges are evident as it has reduced its fleet from 74 planes in 2019 to approximately 20 aircraft currently in operation. On Friday, SpiceJet shares closed 3.25% lower at Rs 66.16 on the Bombay Stock Exchange (BSE).
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