Effective April 1, low-cost carrier SpiceJet Ltd, has hived off its cargo and logistics division, SpiceXpress, into a separate entity, a move which the cash-strapped airline says will unlock ‘significant’ value for shareholders.
The separation would strengthen SpiceJet’s balance sheet and pave the way for SpiceXpress to raise funds independently, the airline said in a statement.
As part of the restructuring, SpiceXpress will issue securities in the form of equity shares and compulsorily convertible debentures to SpiceJet for an aggregate amount of Rs. 2,555.77 crore, which is being recognised as one-time gain by the airline.
“The hive off will not only enable SpiceXpress to raise cash independently, it will significantly reduce SpiceJet’s negative net worth. Having restructured over $100 million, outstanding dues to Carlyle Aviation Partner last month, the hive off will further strengthen and deleverage our balance sheet,” said Ajay Singh, Chairman and Managing Director, SpiceJet.
In February, SpiceJet announced that aircraft lessor Carlyle Aviation Partner has agreed to restructure over $100 million of the airline’s dues into equity shares with the latter picking up a 7.5% stake in the airline.
“SpiceXpress will provide greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth,” said Singh.
Singh had last month outlined that the airline is looking to raise fresh capital of Rs. 2,500 crore and is planning to add more aircraft to the fleet — narrow-body, regional aircraft as well as dedicated cargo aircraft.
According to a report by brokerage firm Prabhudas Lilladher, City Union Bank, one of the creditors to SpiceJet, which until recently had an exposure of about Rs. 100 crore to SpiceJet, was repaid Rs. 35 crore by the airline. Other lenders to the airlines include IDFC First Bank, YES Bank, among others. During the Apr-Dec period, the airline recorded a profit of Rs. 51.4 crore.
On Monday, shares of the airline closed at Rs. 31.10, up 2.8% at the National Stock Exchange.
