Shareholders greenlight SpiceJet's fundraising plan through share and warrant issuance

SpiceJet shareholders have given their approval for the airline's plan to raise funds through the issuance of equity shares and warrants, as reported following the annual general meeting (AGM) on January 10, 2024. The shareholders voted in favor of issuing equity shares on a preferential basis and issuing warrants with an option to apply for and be allotted an equivalent number of equity shares on a preferential basis.

The proposal, which aims to raise Rs 2,250 crore, involves issuing up to 130 million convertible warrants and 320 million fresh equity shares. The board had previously agreed to this fundraising plan in December.

The exact amount raised through this approval was not mentioned in the regulatory filing, but the airline has faced a cash crunch due to legal issues over non-payment of dues. The improving profitability of India's aviation sector has enhanced SpiceJet's prospects, and in August 2023, the airline's market share increased narrowly.

Promoter Ajay Singh has already infused Rs 500 crore into the company in August to support its growth, strengthen the fleet, and expand cargo operations. The airline has been dealing with operational challenges, including flight delays, denied boarding, and cancellations, which have led to compensations being paid to affected passengers.

Despite these challenges, SpiceJet's stock has shown resilience, gaining around 70% in the last six months of 2023. The stock rallied 5% on January 10, reaching Rs 65.44 apiece on the BSE, anticipating the shareholders' approval for the fundraise plan. The approval provides a positive outlook for the airline's efforts to overcome financial difficulties and pursue its expansion and revitalization goals.