Ajay Singh's shareholding in SpiceJet down by 38.55% due to new fund raise

SpiceJet on Tuesday stated that its promoter Ajay Singh's shareholding in the airline will reduce from 56.49 per cent to at least 38.55 per cent once the shareholders approve the issuance of equity and warrants to 63 entities at the airline's annual general meeting on January 10.

The airline announced it is going to raise a total of Rs 2,241.5 crore through the issuance of equity and warrants -- Rs 1,591.5 crore will be raised by issuing equity to 58 entities and Rs 650 crore will be raised by issuing warrants on a preferential basis to five other entities.

SpiceJet said that the shareholding of Singh and his other entities will reduce from 56.49 per cent to 38.55 per cent once the aforementioned equity is issued to 58 entities. However, if the warrants issued to the other five entities are converted to equity, then the shareholding of Singh and his related entities will further come down to 34.13 per cent, according to SpiceJet.

The airline said it will use the aforementioned Rs 2,241.5 crore to pay statutory obligations such as Tax Deducted at Source (TDS), Goods and Services Tax (GST), Provident Fund (PF), etc.; settle past dues with creditors; unground its grounded planes and acquire new aircraft; pay for aviation turbine fuel; pay salaries to employees; and for general corporate purposes.

The 58 entities will receive 318.3 million shares in SpiceJet at a price of Rs 50 per share. The other five entities will receive 130 million shares as warrants in the airline at the same price. The shareholders will vote on the issuance of these shares and warrants at the company's annual general meeting on January 10.
 

The airline had on December 12 announced that its board had approved raising fresh capital of Rs 2,241.5 crore from 63 entities, including financial institutions, foreign institutional investors, high-net-worth individuals, and private investors such as Elara India Opportunities Fund, Aries Opportunities Fund, Mahapatra Universal Limited, Nexus Global Fund, Prabhudas Lilladher, and Resonance Opportunities Fund.

The airline has been facing a cash crunch for the past several quarters. It is also dealing with multiple court cases regarding money owed to former owner Kalanithi Maran, financial services firm Credit Suisse, aircraft lessors, and engine lessors.