The Civil Aviation Ministry has given a Rs. 600 crore lifeline to cash-strapped SpiceJet. To address the airline’s liquidity crisis, the Ministry requested banks on Tuesday to give out working capital loans to the tune of Rs. 600 crore, based on the assurances of the promoter.
In a statement, the Ministry said: “Banks or financial institutions to lend up to Rs. 600 crore back by a personal guarantee of the Chairman, SpiceJet. This should be paid immediately after securing the long-term investment which will take around eight weeks to consummate.”
“The Ministry of Finance will be requested to permit External Commercial Borrowing for working capital as special dispensation as was done in the 2012 when a similar crisis had arisen in the aviation sector,” it added.
SpiceJet’s Chief Financial Officer S.L. Narayanan told The Hindu, “we met with the Aviation Ministry officials over the past couple of days and explained to them that no bank is willing to finance SpiceJet even with the comfort of a promoter guarantee … we are not running away from our obligations.”
On whether Kalanithi Maran’s Sun TV shares can be pledged to bailout SpiceJet, Mr. Narayanan said it was not possible. “Minority shareholders will never forgive us if we go down that path. It is also bad corporate governance to undermine our media assets with unnecessary exposure to our aviation business.”
The Aviation Ministry also said airport operators would be requested to give 15 days for making payments. The public sector oil companies would be requested to give credit up to 15 days.
Prakash Kamatreports from Panaji:
Around 600 passengers were stranded at the Dabolim airport, south Goa, on Tuesday, after SpiceJet cancelled all evening flights. Officials were in touch with the SpiceJet management to arrange for alternative flights, police said
