The recently launched INR30 billion rupee (USD358.5 million) capital raising at SpiceJet (SG, Delhi International) is already oversubscribed, sources have told the Times of India. The low-cost carrier released the preliminary placement document (PPD) for the raising earlier this week, and the insiders said there is "strong investor confidence in the airline and in its growth potential."
"The qualified institutional placement received an overwhelming response from investors and was significantly oversubscribed on its first day," an unidentified source told the outlet. "The total offers received exceed INR30 billion. The support shows the belief in the airline's ability to capitalise on India's growing aviation market and achieve sustained growth."
Early candidate investors reportedly include the Tata Mutual Fund, Bandhan Bank, Discovery Fund, Plutus, and Jupiter Fund Management as well as family companies linked to entrepreneurs Madhu Kela, Akash Bhanshali, Sanjay Dangi, and Rohit Kothari.
The 500 page plus preliminary placement document, issued on September 16, notes that the equity shares will have a face value of INR10 (USD0.12) each and a floor price of INR64.79 (USD0.77). The filing says that SpiceJet received in-principle approval from the Bombay Stock Exchange on September 16 for the listing of the issued shares but still needs to obtain final listing and trading approval after the allotment.
"A minimum of 10% of the issue size shall be made available for allocation to mutual funds only, and the balance shall be made available for allocation to all qualified institutional buyers, including mutual funds," the filing says. "In case of undersubscription in the portion available for allocation to mutual funds, such undersubscribed portion or part thereof may be allotted to other eligible qualified institutional buyers. Our company may offer a discount of not more than 5% on the floor price, in accordance with the approval of the shareholders by way of special resolution pursuant to the postal ballot dated September 13, 2024, and in terms of Reg.176(1) of the SEBI ICDR regulations."
The filing also reveals that SpiceJet failed to pay statutory dues amounting to INR4.27 billion (USD51 million) between April 2020 and August 2024, citing its “constrained financial position." Specifically, it owes INR2.198 billion (USD26.2 million) in tax deducted at source, INR1.3547 billion (USD16.2 million) in provident fund contributions, and INR713.3 million (USD8.5 million) in goods and services taxes.
"Several of our aircraft have been grounded owing primarily to alleged default in payment of dues to the aircraft lessors and lack of maintenance," the filing notes. The PPD goes on to say that these grounded aircraft include six B737-8s, three B737-700(BDSF)s, five B737-800s, two B737-900ERs, three B737-700s, and seventeen DHC-8-Q400s.
"We propose to utilise a substantial portion of the proposed capital raise through this preliminary placement document for un-grounding of our fleet in addition to our ongoing efforts to un-ground our aircraft," the filing adds. "We believe that our prospects for servicing our existing debt and achieving future profitability depend in large part on our ability to attain critical mass in terms of fleet size, projected passenger volumes and projected yield levels."
Specifically, SpiceJet intends to use INR6.015 billion (USD71.8 million) to settle statutory dues; INR7.5 billion (USD89.5 million) to settle creditor liabilities including aircraft and engine lessors, engineering vendors, and financiers; INR4.1 billion (USD48.9 million) on ungrounding and maintenance of the existing fleet including purchase of components, spare parts, and repairs; INR3.7 billion (USD44.1 million) on new aircraft; INR1.189 billion (USD14.2 million) on paying employee dues; INR1.503 billion (USD17.9 million) on airport dues, and the remainder on general corporate purposes (which may not exceed 25% of the gross proceeds).
