Companies

Promoter has refused to infuse funds, SpiceJet tells High Court

Forum Gandhi Mumbai | Updated on August 30, 2021

Carrier hopes to raise ₹570 crore, ‘fully collateralised’, from lender banks

SpiceJet has informed the Delhi High Court that its promoter Ajay Singh has declined to infuse fresh funds in the debt-strapped airline.

“Singh has expressed his inability to inject further funds in the Company in his individual capacity. SpiceJet has also approached its bankers for additional credit facilities and other mechanisms for raising funds,” SpiceJet said in the court filing.

The court proceedings are related to a dispute with aircraft manufacturer De Havilland. The court filings also reveal that the Reserve Bank of India has rejected the airline’s request for an extension of the timeline and ratio on the “one time restructuring”. The airline has sought fresh financing of approximately ₹570 crore from its existing lenders, the court document shows.

However, when contacted, a SpiceJet spokesperson said, “Singh is committed to the well-being and sustenance of SpiceJet and has already collateralised his considerable stake in the company with various banks. In fact, he has also offered to infuse more funds as part of SpiceJet’s proposal to bankers.”

As a part of its court documents, SpiceJet attached an email it sent to Yes Bank on July 15. It requested for additional loans summing up to approximately Rs 300 crore and bank guarantees of approximately Rs 140 crore for national oil companies. As a part of the contours of the proposal, SpiceJet said that "The promotors shall infuse Rs 500 million in the company. The infusion will happen by October 2021."  However, the document submitted to the court is dated August 24, 2021 which mentions that Singh is unable to infuse funds in his individual capacity.

When asked about RBI’s decision on OTR, the spokesperson added: “The matter with regard to RBI OTR is nothing specific to SpiceJet and there are many other industries which are governed by the same.”

‘Approached banks’

In response to questions on raising funds, the spokesperson said that: “SpiceJet is a low-debt company with significant collateral with banks. The company has requested banks to allow it to utilise fully collateralised unutilised limits.”

The airline is looking to its existing bankers for additional funding to the tune of approximately ₹570 crore.

Penalty issue

According to documents submitted by SpiceJet to the Delhi High Court, De Havilland has refused to give the debt-strapped airline an extension to pay the £5,000,000 penalty. Earlier this month, SpiceJet had requested an extension of the timeline by 60 days and its request for provision of an alternative security.

The De Havilland dispute is regarding the non-payment of tranches on aircraft deliveries.

The aircraft maker approached the UK Court to seek remedies on the said dues. The UK court passed an order in favour of De Havilland and directed SpiceJet to pay £5 million within 28 days. The aircraft maker then moved an application in the Delhi High Court to implement the same.

In this regard, the SpiceJet spokesperson said that “The matter with regard to De Havilland is pending adjudication before appropriate forum and the Company is contending and assailing the same. Since the same is sub-judice, we do not think it will be appropriate to get into its specifics. Adequate disclosure with regard to the same already forms part of our notes to the accounts.”

Published on August 29, 2021

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