Low-cost carrier SpiceJet said it will consider issuing equity shares via preferential basis in a board meeting on Friday and consider conversion of outstanding liabilities. The company will also consider raising fresh capital via issue of securities to qualified institutional buyers; however, industry experts believe that amid better investing options and SpiceJet’s balance sheet issues, raising cash will be a challenge for the carrier.
“This is to inform you that the Board of Directors of the company, in its meeting scheduled to be held on February 24, will discuss and consider, inter-alia, issuance of equity shares on preferential basis consequent upon conversion of outstanding liabilities into equity shares of the company, subject to applicable regulatory approvals. Further, the Board of Directors will also discuss and consider options for raising fresh capital through issue of eligible securities to qualified institutional buyers, subject to applicable regulatory approvals,” the company informed the exchanges on Tuesday.
SpiceJet is also set to declare its quarterly results on the same date. It posted a net loss of ₹838 crore for the period ended September 30, 2022. Losses widened compared to the year-ago-period when it reported a net loss of ₹562 crore.
The Ajay Singh-promoted carrier has been facing an acute cash crunch for the past several quarters now. It has been trying to raise money prior to Covid, but has had no luck with it.
An industry veteran told businessline: “SpiceJet’s balance sheet is extremely weak, and has been the same for the past several years now. It is tied in a legal tussle with its previous promoters and other authorities. To top that, it owes monies to multiple stakeholders. Why would an investor then want to invest money into an airline which has legacy issues?” the person questioned.
The person explained that the airline has been trying to hive off its cargo business for a year and half now, and has had no luck with it so far.
SpiceXpress, the logistics division of the airline, reported a revenue of ₹206 crore and a net profit of ₹21 crore, the company said in a statement. Profit margin increased to 10 per cent. SpiceXpress transported 27,674.98 tonnes of cargo in the quarter under review.
“If investments were to be done, a potential investor would want to invest in an airline which doesn’t have legacy issues, has a better return on investment possibility too.”
Among all the airlines including IndiGo, Jet Airways and SpiceJet, the latter’s stock prices continue to remain lowest.