In an attempt to infuse more funds in cash-strapped airline, Ajay Singh is planning to add $60.85 million into SpiceJet in lieu of fresh equity shares or convertible instruments, or both. Singh's decision to inject capital came at the meeting of the board of directors, which was called to consider raising fresh funds amid the ongoing financial crisis and legal disputes.
“The board, after deliberating over his offer, agreed to issue equity shares and/or convertible securities/equity share warrants on preferential basis in one or more tranches for an amount of INR 500 crore,” the airline said in a statement.
“The infusion of funds will substantially strengthen the company’s financial position and is a powerful vote of confidence in its future and long-term viability,” the statement added.
With this capital injection, the airline said it would be entitled to additional credit facilities of INR 2.06bn under the government's emergency credit line guarantee scheme (ELGS).
SpiceJet added that it is already utilising $50 million-worth ECLGS funds that it has already received and its own cash to revive its grounded aircraft. Two of the grounded aircraft, a Boeing 737 and a Q400, have been operationalised so far and more planes are expected to re-join the fleet soon, it further said.
Commenting on his decision to infuse more funds, Singh said: “This investment will allow the airline to accelerate its growth plans and capture new opportunities in the market, grow its revenue and profits. We are committed to building a sustainable and profitable business, and this investment is a reflection of that commitment.”
Meanwhile the Directorate General of Civil Aviation (DGCA) has put SpiceJet Airlines under enhanced surveillance as a precautionary measure. This is a part of abundant precaution given the incidents during monsoon season last year.