Indian low-cost carrier SpiceJet is to receive an initial batch of funds from a $100 million cash injection package within two weeks.
The carrier announced in a Bombay Stock Exchange announcement yesterday that existing shareholders along with new shareholder WL Ross & Co had firmed up a $100 million cash injection package.
Specific details were not released yesterday but US private equity firm WL Ross says in a statement today that the deal will see the first batch of funds made available to the airline within two weeks, followed by remaining funds after shareholder approval is secured.
"The inufusion of capital will take place in two successive tranches," it says.
"Completion of the funding of the first tranche is subject to certain conditions precedent, which are expected to be fulfilled in the next two weeks. The remainder of the funding will be received after shareholder approval which the company will seek shortly."
It adds: "As part of the transaction, Goldman Sachs has agreed to subscribe for equity warrants in the company under the preferential issue guidelines of SEBI [Securities and Exchange Board of India] and subject to requisite approvals."
A cash injection is badly needed to help the airline deal with losses and pay for aircraft on firm order. India's airlines have been struggling financially as a result of increasing costs and intense competition.
WL Ross says that in addition to its direct investment of an unspecified size, existing SpiceJet shareholders Istithmar World Capital and SpiceJet director Ajay Singh will be providing new funds.
WL Ross & Co chairman and CEO Wilbur Ross, who will be joining the SpiceJet board along with the managing director of the US firm's India operations, says: "This financing is intended to give SpiceJet the staying power to get through the industry consolidation that is underway. We also gain encouragement that oil prices have been abating and that the Government has appointed a committee under the chairmanship of the cabinet secretary to recommend measures to stabilise the industry."