SpiceJet Ltd., the struggling low-cost airline, announced on Saturday that its board has given the green light to raise nearly ₹3,000 crore through a Qualified Institutional Placement (QIP). The funds will provide much-needed relief for the airline's financial woes, enabling the company to settle statutory dues and creditor liabilities.

Key Highlights of the SpiceJet QIP:

• Shares Issuance: SpiceJet will issue 48.7 crore equity shares to institutional investors at ₹61.60 per share. This price includes a premium of ₹51.60 and a small discount of ₹3.19 compared to the floor price.
• Total Capital Raised: The QIP will raise ₹2,999.99 crore in total, providing SpiceJet with fresh capital to meet its mounting obligations.
• Equity Structure Change: After the allotment, SpiceJet’s paid-up share capital will increase significantly from ₹794.67 crore to ₹1,281.68 crore, with the number of equity shares rising from 79.46 crore to 128.16 crore.

Strategic Purpose of the QIP:

SpiceJet is facing severe financial difficulties due to operational disruptions, a reduced fleet, and numerous legal and financial obligations. The airline’s latest move aims to mitigate these issues by addressing its outstanding dues and liabilities.

• Statutory Dues: The airline plans to allocate a portion of the QIP proceeds to clear statutory dues amounting to ₹601.5 crore. This includes:
  • ₹297.5 crore for pending Tax Deducted at Source (TDS) payments.
  • ₹156.4 crore toward employee provident fund deposits.
  • ₹145.1 crore for Goods and Services Tax (GST) liabilities.
• Creditor Payments: The funds will also be used to settle overdue payments to creditors such as aircraft and engine lessors, engineering vendors, and financiers.

Operational Challenges and Legal Setbacks:

SpiceJet’s financial issues have been compounded by operational setbacks, including fleet reductions and ongoing legal battles.

• Supreme Court Ruling: On Friday, the airline suffered a blow when the Supreme Court upheld a Delhi High Court order directing SpiceJet to ground three aircraft engines due to non-payment to lessors. A bench led by Chief Justice D Y Chandrachud rejected SpiceJet's appeal, saying, "We will not interfere. It's a correct order."

• Share Price Impact: Following these developments, SpiceJet’s shares fell by 3.25%, closing at ₹66.16 on the Bombay Stock Exchange (BSE).

Future Outlook for SpiceJet:

The successful execution of this QIP marks a critical moment for SpiceJet. With fresh capital in hand, the airline will be better equipped to stabilize its operations, regain fleet capacity, and resolve its financial disputes. However, the challenges remain steep, and SpiceJet’s ability to navigate its legal battles and maintain investor confidence will be key to its recovery.

The airline continues to operate in a highly competitive environment, and its focus on restructuring and securing long-term financial health will determine its future trajectory in the aviation sector.

In Summary:

• Fundraising Approval: SpiceJet’s board approved raising nearly ₹3,000 crore via a QIP.
• Share Allotment: 48.7 crore equity shares to be issued at ₹61.60 per share.
• Debt Clearance: Proceeds will be used to settle statutory dues and creditor liabilities.
• Legal Setback: Supreme Court upholds a ruling to ground engines due to unpaid lessor dues.

With this financial lifeline, SpiceJet looks to weather its current challenges and restore operational efficiency, though it faces ongoing obstacles in a turbulent market.