SpiceJet, a budget airline in India, has announced that it has separated its cargo and logistics business, SpiceXpress, into a new entity, SpiceXpress and Logistics Pvt Ltd. The move, which took effect from April 1, is expected to unlock significant value for the logistics business and substantially reduce SpiceJet’s negative net worth.
SpiceJet has stated that the restructuring will allow SpiceXpress to raise funds independently, enabling greater and differentiated focus on the cargo and logistics business. SpiceXpress reported a net profit of Rs 51.4 crore for the April-December period of FY23, highlighting the strong growth potential of this business.
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 a total amount of Rs 2,555.77 crore. SpiceJet Ltd chairman, Ajay Singh, stated that the decision to hive off SpiceXpress is in line with the company’s long-term business plan and will pave the way for the logistic business to raise capital independently.
The separation of SpiceXpress into a distinct entity is expected to be a significant milestone in SpiceJet’s growth story, enabling the company to streamline and enhance its cargo business operations. Singh noted that the hive off will not only allow SpiceXpress to raise cash independently, but it will also significantly reduce SpiceJet’s negative net worth.
SpiceJet has recently restructured over $100 million of outstanding dues to Carlyle Aviation Partner, one of its key lessors, in February. The hive off is expected to further strengthen and deleverage SpiceJet’s balance sheet, allowing the company to focus on its core airline operations.
In conclusion, SpiceJet’s decision to hive off its cargo and logistics business, SpiceXpress, into a separate entity is expected to unlock significant value for the logistic business and reduce SpiceJet’s negative net worth. The restructuring will allow SpiceXpress to raise funds independently and provide more focused and efficient services to its customers. The move is also in line with SpiceJet’s long-term business plan, enabling the company to streamline and enhance its cargo business operations.