NEW DELHI, Sept 21: SpiceJet on Tuesday said shareholders have approved the transfer of its cargo and logistics services business to a subsidiary, on a slump sale basis, through an all-share deal worth over Rs 2,555 crore, a move that will help the airline to significantly reduce its negative networth.
Besides, the shareholders have cleared the proposal to raise up to Rs 2,500 crore through the Qualified institutional placement (QIP) route.
These developments also come at a time when the airline industry is slowly recovering after being battered by the coronavirus pandemic.
In a release, the budget carrier said it has received shareholders’ approval to transfer the cargo and logistics services business to its subsidiary, SpiceXpress and Logistics Private Ltd.
It would be done as a going concern on a slump sale basis valued at Rs 2,555.77 crore. The consideration for the slump sale shall be discharged by SpiceXpress by issuance of its shares in favour of SpiceJet, it added.
“The transfer of the logistics business will result in a one-time gain of Rs 2,555.77 crore for SpiceJet wiping out a substantial portion of the company’s negative networth. SpiceJet had a negative networth of Rs 3,300 crore as on June 30, 2021. The negative networth will reduce to about Rs 745 crore post the transfer of the logistics business,” the release said.
In the three months ended June 30, the company’s logistics arm raked in a net profit of Rs 30 crore. During the same period, the carrier recorded a net loss of Rs 729 crore.
The release said the logistics arm has a network that spans over 68 domestic and more than 110 international destinations, including the US, Europe and Africa.
According to the airline, the transfer will provide greater and differentiated focus to cargo and logistics business as well as allow raising capital for the business to accelerate its growth.
“The proposed transfer, with separate and enhanced management focus, will provide greater opportunity and flexibility in pursuing long-term growth plans and strategies for SpiceXpress business providing various innovative logistics platforms using fulfilment as a service.
“It will also assist the management in evaluating the business performance of SpiceXpress as an independent entity while leveraging and unlocking significant value for the company and its shareholders,” it added.
SpiceJet Chairman and Managing Director Ajay Singh said the shareholders’ approval paves the way for its long-term plans to take a concrete shape and will result in unlocking significant value.
The transfer will reduce SpiceJet’s negative networth by Rs 2,555.77 crore and strengthen the balance sheet significantly, he noted.
(PTI)
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