Irish firm Carlyle Aviation to restructure SpiceJet aircraft leases, secure $50 million investment

SpiceJet has entered into a term sheet agreement with Ireland-based Carlyle Aviation Management Limited (CAML). As a part of the agreement, CAML will restructure part of the airline’s aircraft lease obligations amounting $137.68 million. 

Upon settlement/waivers will be adjusted to $97.51 million owed to various lessor entities managed by CAML or its affiliates. 

Carlyle Aviation will increase the stake in SpiceJet through equity conversion at Rs 100 per share. The price of Rs 100 per share is 62% higher than SpiceJet's closing price of Rs 61.46 on Friday. 

CAML will have the option to acquire a stake worth $50 million in the Spice group at the cost of restructuring debt worth $40 million.

"The transaction (including all the arrangements specified in the Term Sheet) will be further affirmed in definitive documentation amongst the parties and is subject to various factors, including receipt of approval of inter alia the shareholders of the company," SpiceJet said in a regulatory filing.

Under the agreement, lessors may also acquire compulsorily convertible debentures from SpiceJet’s subsidiary, SpiceXpress & Logistics, amounting to $20 million. These debentures would have priority over all other existing and future equity or equity-linked securities of SpiceXpress, according to the filing.

Meanwhile, Spicejet plans to raise Rs 3,200 crore through QIP, warrants and capital infusion by the promoter. These funds will be used in operationalising its grounded fleet, liability settlement, new fleet induction and other general purposes. 

Carlyle Aviation Partners is the commercial aviation investment and servicing arm of Carlyle's Global Credit business managing about $186 billion in assets as of March 31, 2024.

The airline is currently struggling with heavy financial dues and grounded aircraft, slowing down its commercial operations. But the airline is optimistic to put 28 of its grounded planes back into air and double it operational fleet capacity soon.

SpiceJet had an operational fleet of 74 aircraft in 2019 which has now reduced to just 28 in 2024 with about 36 aircraft grounded due to pending dues, supply chain issues etc.