BackSpiceJet seeks nod from shareholders to hive off cargo biz
The budget airline expects its cargo unit, SpiceXpress, to operate as a separate entity on or around 1 October
PremiumNEW DELHI: No-frills carrier SpiceJet Limited, which had in July announced plans to hive off its cargo operations into a separate entity, on Tuesday said it has sought permission from its shareholders to complete the process.
In a stock exchange notification, SpiceJet said it has sought approval from shareholders through postal ballot for “transferring of its cargo and logistics services on a slump sale basis along with all related assets and liabilities, including, knowhow, trademark, licenses, franchises, customer contracts, distribution network etc. to its subsidiary SpiceXpress and Logistics Pvt. Limited (“SpiceXpress")."
The airline, which had in July announced plans to raise up to Rs2,500 crore, will also seek approval from its shareholders to raise funds through QIP (Qualified Institutional Placement), it said in the stock exchange notification.
In a separate statement, SpiceJet said its logistics business has been valued at Rs2,555.77 crore based on an independent valuation exercise and the purchase consideration for the same shall be discharged by SpiceXpress by issuance of shares of SpiceXpress to SpiceJet, subject to necessary approvals.
The airline added that it expects SpiceXpress to operate as a separate entity upon transfer of business on or around 1 October.
"The proposed transfer of business to SpiceXpress will allow the new company to rapidly grow its innovative logistics platform and its unique fulfilment as a service business model," said Ajay Singh, chairman and managing director, SpiceJet Ltd.
"SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth," Singh added.
SpiceJet reported its sixth consecutive quarterly loss at ₹731.12 crore for the three month period ended 30 June, largely because the second wave of covid-19 pandemic led to a massive decline in passenger traffic.
Walker Chandiok & Co LLP, the auditors of SpiceJet, have once again raised doubts about the airline’s ability to continue as a going concern as mounting losses have led to complete erosion of net worth, with current liabilities exceeding assets by ₹6,044.91 crore as of 30 June.
"SpiceJet (SJet) continues to maintain momentum in the cargo business with Q1FY22 net profit of Rs300mn ( ₹30 crore) for the ‘logistics platform’. Recapitalisation remains the key trigger for the business," said a 16 August research report on SpiceJet by Icici Securities.
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