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To tide over the pandemic-led disruptions, stressed low-cost airline SpiceJet has sought a one-time debt restructuring, apart from ₹500-crore in a working capital loan, from YES Bank. It has also submitted a revival plan and its financial documents to the private bank.
Ajay Singh-led SpiceJet has submitted the restructuring proposal per the guidelines issued by the KV Kamath committee and announced by the RBI in September.
“In an emailed communication to YES Bank, SpiceJet proposed a one-time debt restructuring under RBI guidelines to stay afloat. It will also require ₹500 crore of working capital. Its top management has had a meeting with the Aviation Minister for consideration (of the requests),” said a source.
The airline is understood to have approached YES Bank in November-end. BusinessLine has also learned that there was a meeting with the top bank officials, too. In its emailed response dated December 2, YES Bank said it had held discussions regarding the “restructuring proposal and additional working capital requirement of ₹500 crore under the RBI Covid-19 one-time debt restructuring scheme”. A copy of the email has been reviewed by BusinessLine .
“YES Bank has responded to SpiceJet stating that its request is being evaluated and will be considered after due diligence of its financial position,” said one of the sources.
Though the bank hasn’t given a timeline, the officials said due-diligence by external agencies takes time. “We are currently evaluating the company’s financial and business revival plan,” the bank added.
SpiceJet’s denial
In response to BusinessLine ’s query on the debt restructuring, SpiceJet said: “No. Restructuring is done for NPAs. Our account is standard.” It also denied that it has submitted a request for working capital. YES Bank did not respond to an email query in this regard from BusinessLine .
Sources said the airline has taken the decision due to weak second-quarter results, and the mounting pressure for payments from multiple sources.
However, SpiceJet said: “Your information is completely wrong.”
A company source said: “Even though SpiceJet has had a better result than its counterparts, this decision is being made in order to hedge the impact of Covid-19 in the coming quarters.”
The airline reported a loss of ₹105.61 crore in the second quarter of FY21, against a loss of ₹461 crore in the same period the previous year. It revenues plunged 57 per cent. Its current liabilities for the quarter that ended on September 30 stood at ₹7,981.14 crore, compared to ₹6,649.83 crore in the previous-year period.
Amid the lower income and higher expenses, SpiceJet’s negative net worth stands at ₹2,285.37 crore as of September 30, 2020. It had also deferred payments to its vendors, and dues to statutory authorities. Additionally, SpiceJet owes over ₹157 crore to the Airports Authority of India (AAI), and has hence been put on cash-and-carry mode.
With inputs from Surabhi in Mumbai
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