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SpiceJet Ltd has completed the hive-off of its cargo and logistics division ‘SpiceXpress’ into a separate entity, SpiceXpress and Logistics Pvt Ltd. SpiceJet has sold the cargo business for Rs 2,555.77 crore.
The hive-off, effective April 1, 2023, paves the way for SpiceXpress to raise funds independently. The hive-off would strengthen SpiceJet’s balance sheet, wipe out a substantial portion of its negative net worth and unlock value for the company and its shareholders.
The consideration for the slump sale will be discharged by SpiceXpress by the issuance of securities in the combination of equity shares and compulsorily convertible debentures to SpiceJet, for an aggregate amount of Rs 2,555.77 crore, which will also strengthen its the balance sheet.
Ajay Singh, Chairman & Managing Director, said, “The separation of our cargo and logistics arm is a stepping stone in our growth story, which will unfold in the times to come.”
“SpiceXpress will provide greater and differentiated focus to the cargo and logistics business, and will open up the possibility of raising capital to accelerate growth. The decision to hive-off SpiceXpress is in sync with our long-term business plan and will unlock significant valuation of the logistic business. Both SpiceJet and SpiceXpress have great potential and will complement each other well.”
Also read: Spicejet to consider raising fresh capital
“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.”
During the pandemic, SpiceXpress played a critical role in ensuring that vital trade routes between India and other countries remained intact. With India’s transportation system coming to a virtual halt, SpiceXpress freighters and cargo planes took to the skies every single day to ferry record supplies of relief material, medicines and medical equipment to and from wherever was required
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