Carlyle Aviation Partners is looking to take a 5% stake in SpiceJet (SG, Delhi International) in a debt-to-equity swap along with accepting an undisclosed amount of convertible debentures in SpiceXpress (Delhi International), India's Economic Times reports.
According the ch-aviation fleets ownership module, Carlyle has at least seven B737-800s and three B737-900ERs currently placed with the troubled Indian LCC. The lessor is considered to be highly exposed to SpiceJet's financial problems, and the deal will see it convert outstanding lease debts into equity.
The newspaper also reports that Carlyle will take the convertible debentures with a view to converting them into equity down the track. SpiceJet's board is due to have a meeting on February 24 which will, among other things, decide on a strategy to convert leasing debts into equity. It is believed SpiceJet owes Carlyle around USD100 million dollars.
"The proposed deal is expected to close within the next ten days. The board will take a call on the matter on February, 24 and accordingly, the next step to materialize the stake sale will be decided," a source close to the discussions said. "The majority of dues, or around 75% of the amount, will be converted into compulsorily convertible debentures in the cargo arm, SpiceXpress, and the rest will translate into equity in SpiceJet."
The proposed transaction values SpiceJet's cargo subsidiary, SpiceXpress, in excess of USD1 billion. The deal would also significantly reduce SpiceJet's debt which, in turn, is likely to make it easier for the airline to raise fresh capital. Earlier this week, ch-aviation reported that SpiceJet's board wanted to raise more capital by issuing an unspecified number of securities to qualified institutional buyers as well as issuing shares on a preferential basis to convert existing debt into equity. Carlyle Aviation Partners and SpiceJet have been approached for comment.
