SpiceJet board approves debt-equity swap with Carlyle, slump sale of cargo biz to subsidiary

The SpiceJet board, on Monday, approved the slump sale of its cargo business to subsidiary SpiceXpress & Logistics. The cargo business shall be exclusively undertaken by SXPL, effective April 1, 2023. The airline has also approved swapping aircraft lessor Carlyle's debt into equity, and has proposed raising fresh capital of Rs 2,500 crore through Qualified Institutions Placement (QIP).

“The consideration for said transfer of cargo business undertaking shall be discharged by SXPL by issuance of securities in the combination of equity shares and Compulsorily Convertible Debentures (“CCDs”) to the Company for an aggregate amount of Rs 2,555.77 crore,” the airline said in a filing.

The airline restructured over $100 million outstanding dues to Carlyle into equity shares and CCDs. The transaction will wipe out over $100 million debt of SpiceJet, the company said.

The board has also approved a debt-equity swap with aircraft lessor Carlyle Aviation Partners, SpiceJet said. The board has given its nod to the issue of “equity shares on preferential basis to these aircraft lessors consequent upon conversion of their existing lease liabilities equivalent to an amount not exceeding US$29.5 million at price of Rs 48 per equity share or such price as may be determined in accordance with extant preferential issue guidelines, whichever is higher.” Following the transaction Carlyle will have over 7.5 per cent equity stake in SpiceJet.

“Additionally, SpiceJet will transfer Compulsorily Converted Debentures (CCDs) of SpiceXpress and Logistics Private Limited (SXPL), held by SpiceJet aggregating to US $65.5 million, subject to regulatory approvals. The CCDs will be converted into equity shares of SpiceXpress at an anticipated future valuation of $1.5 billion or Rs 12,422 crore,” the company said.

Ajay Singh, Chairman and Managing Director, SpiceJet said, “Carlyle Aviation Partners picking up a stake in our passenger and cargo business reinforces the huge potential of SpiceJet and SpiceXpress. Carlyle, a global aviation leader, partnering us will tremendously boost our business and this deal would be a transforming moment of change and opportunity for us. The transaction will substantially deleverage our balance sheet thereby allowing us to access fresh funds at a competitive rate and we aim to follow suit with other lessors as well in the near term.”

The SpiceJet board, further, also approved the settlement with aircraft lessor Castlelake. As part of its restructuring with aircraft lessor CLSEC Holdings 10 DAC, affiliate entity of Castlelake, and in order to acquire two Boeing model 737-800 airframes, SpiceJet has agreed to purchase the entire share capital of AS Air Lease 41 (Ireland) Limited, the legal and beneficial owner of two Boeing model 737-800 airframes, from CLSEC Holdings 10 DAC.

The airline’s board has also proposed seeking approval of members of the company to raise fresh capital of up to Rs 2,500 crore through issue of eligible securities to qualified institutional buyers.

Also read: Relief for SpiceJet? Carlyle likely to convert $100-mn debt into 5% stake in airline