Cash-strapped domestic carrier SpiceJet has announced a significant debt restructuring agreement with Carlyle Aviation Management on Tuesday.
Under the deal, Carlyle Aviation will write off $40.17 million in lease arrears and convert $30 million of the remaining arrears into equity.
In a statement, SpiceJet said Carlyle Aviation would convert the $30 million into the carrier’s equity at ₹100 per share, substantially increasing its stake in the airline.
Additionally, another $20 million in lease arrears would be converted into compulsorily convertible debentures (CCDs) of SpiceXpress & Logistics Private Limited, SpiceJet’s cargo arm.
“This strategic partnership between SpiceJet and Carlyle Aviation will bolster SpiceJet’s financial position, accelerate its growth plans, and enhance its ability to compete in the Indian aviation market,” SpiceJet said.
The airline is expecting to benefit from the induction of wide-body aircraft and sees a high growth rate in non-metro routes.
The airline’s fleet has depleted to 28 in 2024 from 74 in 2019, with 36 planes grounded over pending dues or issues relating to funds.
SpiceJet’s total outstanding debt exceeds ₹4,300 crore, including ₹3,700 crore in dues to lessors and engineering liabilities, as well as statutory dues of ₹650 crore.
SpiceJet has been undergoing various restructuring efforts.
As of the June 2024 quarter, it had lease obligations worth $137.68 million, which will now be reduced to $97.51 million post settlement.
The airline also plans to raise ₹2,500 crore through a qualified institutional placement and has received board approval to raise up to ₹736 crore through the issuance of warrants to promoters.
Carlyle Aviation currently holds a nearly 6 per cent stake in SpiceJet, the latter said in a response to a Reuters inquiry. The airline did not disclose the stake Carlyle Aviation will hold post conversion.
Late last month, the country’s aviation watchdog placed SpiceJet under enhanced surveillance after a recent audit revealed “certain deficiencies”.
On Tuesday, the shares of the airline rose 2.47 per cent to ₹65.57 apiece. With input from Reuters
