SpiceJet, a major Indian airline, has signed a settlement agreement with Export Development Canada (EDC) to clear a hefty debt of USD 90.8 million (Rs 755 Crore). This settlement is expected to bring in substantial savings of USD 68.3 million (Rs 567 Crore) for SpiceJet, the company on Tuesday announced through an exchange filing.
Ownership Transfer
As part of the agreement, SpiceJet gains complete ownership of 13 EDC financed Q400 planes that were previously financed by EDC.
Ajay Singh, Chairman and Managing Director of SpiceJet, said, "We are pleased to have reached this settlement agreement with EDC and we thank their leadership and management team for their cooperation, understanding and progressive approach through the process. This significant milestone will allow us to strengthen our balance sheet and position the airline for long-term success."
Origins of Liabilities
The liabilities stemmed from a loan taken by SpiceJet back in 2011 to procure 15 aircraft. Currently, twelve of these Q400 planes are grounded. With the settlement in place, SpiceJet plans to refurbish and reintroduce these planes into service, facilitating the launch of flights on various regional and UDAN routes.
As part of the settlement, SpiceJet will pay a comprehensive settlement amount to resolve outstanding liabilities amounting to close to $91 million as per SpiceJet books of accounts, the company said via regulatory filing.
SpiceJet shares
The shares pf SpiceJet on Tuesday at 3:30 pm IST closed at Rs 61.06, up by 3.93 per cent.
