Low-cost carrier SpiceJet Ltd might swap 5% of its equity for dues owed to its largest aircraft lessor, US-based Carlyle Aviation Partners, two people informed of the development said.
“The proposed deal is expected to close within the next 10 days. The board will take a call on the matter on 24 February, and accordingly, the next step to materialize the stake sale will be decided,” one of the people cited above said.
Under the proposed deal, Carlyle is expected to convert over $100 million of outstanding dues into equity in SpiceJet and compulsorily convertible debentures (CCDs) in the cargo arm SpiceXpress which Carlyle can convert into equity in the company at a later stage, Mint has learnt.
“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 second person aware of the development said.
The airline has 13 Boeing 737 aircraft on lease from Carlyle Aviation.
The Gurugram-based airline had been in discussions with strategic investors for a stake sale to bring in funds since last year.
On 21 February, the no-frills carrier said that the company would consider issuing equity shares on a preferential basis at the board meeting and would consider the conversion of outstanding liabilities.
The company will also consider raising fresh capital via the issue of securities to qualified institutional buyers.
The proposed deal has pegged the worth of the airline’s logistics subsidiary SpiceXpress at over $1 billion in deal with Carlyle.
The deal is expected to result in a significant reduction in debt for the airline, aid in deleveraging the balance sheet for future expansion and is likely to ease the company’s access to fresh funding at competitive rates in the future, the people added.
SpiceJet and Carlyle did not respond to Mint’s queries till press time.
