After SpiceJet's Distastrous Q2 Report Card, Board Approves Lifeline ₹2,250 Cr Fundraising

Shares of budget airline SpiceJet nosedived on Tuesday after disappointing results but clawed back some losses after the board agreed to a major fundraising plan that could give the struggling carrier a lifeline.

What Happened: The board of the low-cost carrier has given the green light to a fundraising plan that involves issuing 130 million convertible warrants and 320.8 million fresh equity shares, priced at ₹50 each, aiming to raise around ₹2,254.03 crore.

Notably, the issue price reflects an 18.4% discount compared to the closing stock price on December 11, 2023.

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The airline, currently facing legal challenges over unpaid dues, is in urgent need of capital. In the second quarter of the fiscal year 2024, SpiceJet reported a net loss of ₹431.54 crore, which took the stock down nearly 7%.

Despite operational difficulties, SpiceJet’s stock has rallied by about 70% in the past six months. The airline’s market capitalization stands at ₹4,000 crore, with Chairman Ajay Singh and other promoters holding a 56.5% stake, of which 37.9% is pledged.

This fundraising plan comes after SpiceJet Chairman Singh infused ₹500 crore into the company in August 2023. The airline’s strategic move aims to navigate legal challenges, improve operations and capitalize on the recent exit of GoFirst from the market.

SpiceJet said this week that it was looking to list on the National Stock Exchange as it hunts for more funding from public markets.

Price Action: SpiceJet’s share price came off session lows to still trade firmly in the red, down 4.82% lower at ₹57.65 near the close of trade on Tuesday.

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