SpiceJet Ltd. said on Monday it has hived off its cargo and logistics business SpiceXpress into a separate entity—SpiceXpress and Logistics Pvt. Ltd.—from April 1.
The move results in a one-time gain of Rs 2,555.77 crore for SpiceJet, substantially reducing its negative net worth, the company said.
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It also paves the way for SpiceXpress to raise funds independently, SpiceJet said.
The decision to hive off SpiceXpress is in sync with the company's long-term business plan and will unlock a significant valuation of the logistics business, SpiceJet Ltd. Chairman Ajay Singh said.
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Singh further said, "The separation of our cargo and logistics arms is a stepping stone in our growth story, which shall unfold in the times to come."
SpiceXpress reported a net profit of Rs 51.4 crore for the April-December period of FY23.
"In a bid to boost the growth of its cargo business and provide a more streamlined and efficient service to its customers, SpiceJet Ltd. has completed the hive off of its cargo and logistics division 'SpiceXpress' into a separate entity, SpiceXpress and Logistics Pvt. Ltd.," the company said.
The consideration for the slump sale will be discharged by SpiceXpress through 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 the balance sheet of SpiceJet, it said.
According to Singh, "SpiceXpress will provide a greater and differentiated focus to the cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth".
Both SpiceJet and SpiceXpress have great potential and will complement each other well, he added.
He also said that the hive off will not only enable SpiceXpress to raise cash independently, but it will also significantly reduce SpiceJet's negative net worth.
"Having restructured over $100 million in outstanding dues to Carlyle Aviation Partner last month, the hive off will further strengthen and deleverage our balance sheet," Singh said.
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