SpiceJet said on Tuesday that shareholders had approved the transfer of its freight and logistics services business to a subsidiary, on the basis of a low-cost sale, through a stock deal valued at over 2,555 crore rupees, a move that will help the airline significantly reduce its negative effects. net value.
In addition, shareholders authorized the proposal to increase to Rs 2,500 crore through the Qualified Institutional Investment Channel (QIP). These developments also come at a time when the airline industry is slowly recovering from being battered by the coronavirus pandemic. In a statement, the low-cost carrier said it has received shareholder approval to transfer the freight and logistics services business to its subsidiary SpiceXpress and Logistics Private Ltd.
This would be done as a going concern on a declining sales basis worth Rs 2,555.77 crore. The consideration for the discount sale will be paid by SpiceXpress through the issuance of its shares to SpiceJet, he added. of the company’s negative equity. SpiceJet had a negative net worth of Rs 3,300 crore as of June 30, 2021. The negative net worth will decrease to around Rs 745 crore after the logistics business is transferred, âthe statement said.
In the three months ended June 30, the logistics arm of the company achieved a net profit of Rs 30 crore. During the same period, the carrier recorded a net loss of Rs 729 crore. The statement said the logistics arm has a network that covers more than 68 domestic destinations and more than 110 international destinations, including the United States, Europe and Africa.
According to the airline, the move will allow for a more and differentiated focus on freight and logistics activities, as well as raising capital for the company to accelerate its growth. âThe proposed transfer, with a distinct and improved management focus, will provide greater opportunity and flexibility in pursuing long-term growth plans and strategies for the SpiceXpress business providing various innovative logistics platforms using execution as a service.
âIt will also help management assess the business performance of SpiceXpress as an independent entity while leveraging and unlocking significant value for the company and its shareholders,â he added.
SpiceJet Chairman and CEO Ajay Singh said the shareholder approval paves the way for his long-term plans to come to fruition and will unlock significant value. The transfer will reduce SpiceJet’s negative net worth by Rs2,555.77 crore and significantly strengthen the balance sheet, he noted. SpiceJet shares edged down to Rs 78.20 during morning BSE trading.