SpiceJet, which has been grappling with a cash crunch for several quarters, announced on Thursday that its board is considering options for raising fresh capital through the issuance of equity or convertible securities on a preferential basis.
Last month, SpiceJet informed the Delhi High Court (HC) that it was “struggling to stay afloat” after the court mandated the airline to make a payment to its former owner, Kalanithi Maran, for outstanding dues.
The airline argued in court that compelling it to make a cash payment would adversely impact the involved parties.
It emphasised that none of the stakeholders would benefit if the budget airline were to enter insolvency. The airline on Thursday said its board meeting, which was scheduled to be held on Friday to approve the second-quarter (Q2) results, has now been deferred to Monday. IndiGo, the only other listed airline in India, has already released its Q2 results on November 3.
SpiceJet’s board meeting, which will take place on Monday, will also consider the matter of raising fresh capital. “This is to inform you that the board of directors of the company in its meeting scheduled on December 11, 2023, will discuss and consider... options for raising fresh capital through the issue of equity shares and/or convertible securities on a preferential basis, in accordance with the relevant provisions of applicable laws and subject to the approval of the shareholders of the company and receipt of applicable regulatory approvals, as may be required,” the airline mentioned.
The airline has incurred losses since 2018-19, with a net loss of Rs 1,513 crore in 2022-23 and Rs 1,744 crore in 2021-22. In the first quarter of the current financial year, the airline made a net profit of Rs 197.6 crore.
SpiceJet has been facing a cash crunch for the past several quarters. It is also dealing with multiple court cases regarding money owed to Maran, financial services firm Credit Suisse, and lessors.
Credit Suisse and SpiceJet have been embroiled in a legal conflict since 2015 concerning outstanding debts of approximately $24 million.
In August 2022, both parties informed the Supreme Court (SC) that they had reached an agreement. In March this year, Credit Suisse initiated a contempt case against SpiceJet Chairman Ajay Singh and the airline, asserting that they had not honoured their payment obligations as outlined in the settlement terms. In September, the airline paid $1.5 million to Credit Suisse following an SC directive.
Singh’s dispute with Maran traces its origins back to 2015 when Maran sold his 58.46 per cent stake in SpiceJet for a meagre sum of Rs 2.
In 2016, Maran took the matter to Delhi HC, alleging that the airline had breached its sale agreement by failing to issue him share warrants and preference shares. In response, the court, in 2017, directed the airline to deposit Rs 579 crore and encouraged both parties to resolve the matter through arbitration. In 2018, an arbitration tribunal ruled in Maran’s favour, awarding him Rs 579 crore plus interest.
On May 29 this year, the HC ordered SpiceJet to pay the interest of Rs 380 crore to Maran. However, on July 7, the SC rejected SpiceJet’s request for an extension to make the payment of Rs 380 crore to Maran and his company, Kal Airways. On July 10, Kal Airways firmly stated there was no possibility of an “amicable” settlement with SpiceJet and demanded that the airline adhere to the court’s order to pay interest. The airline paid Rs 100 crore owed to Maran.