Budget airline SpiceJet on Tuesday announced that it has received the approval of the shareholders’ for transferring its cargo and logistics services business to its subsidiary, SpiceXpress and Logistics Private Limited on a slump sale basis valued at Rs 2,555.77 crore. The company added that the consideration for the slump sale shall be discharged by SpiceXpress by the issuance of its shares in favour of SpiceJet.
This proposed transfer of the logistics business will give SpiceJet a one-time gain of Rs 2,555.77 crore along with wiping out a significant portion of its negative net worth, the company said in a statement. As of the quarter ended June 30, 2021, the carrier’s negative net worth stood at Rs 3,300 crore and it is expected to narrow down to Rs 745 crore after the transfer is over.
In addition to this, the airline also said that it has received a go-ahead from shareholders to raise funds via the issue of eligible securities through Qualified Institutions Placement (QIP). SpiceJet is planning to raise Rs 2,500 crore through a QIP.
“The shareholder approval paves the way for our long-term plans to take a concrete shape and will result in unlocking significant value for the Company and all its shareholders. The transfer of the logistics business to SpiceXpress will reduce SpiceJet’s negative net worth by Rs 2,555.77 crore and strengthen our balance sheet significantly. Post the transfer of the logistics business, the new company will be able to raise capital independently of SpiceJet to fund its growth. We have also received shareholder approval to raise funds through a QIP ensuring our long-term growth plans remain intact,” said Ajay Singh, Chairman and Managing Director, SpiceJet.
As per the quarterly results of the April-June quarter, the logistics arm delivered yet another profitable quarter with a net profit of Rs 30 crore. The revenue was up by 285 per cent to Rs 473 crore as compared to Rs 166 crore in the same quarter in 2020, SpiceJet said in a statement.
Also read: What's next in Air India's sale process?
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today