GoAir files for IPO, looks to raise around ₹3,600 cr
Airline also plans to raise up to ₹1,500 cr through preferential allotment of shares
Wadia Group-controlled Go Airlines (India) Limited or GoAir, which has been recently rebranded as GoFirst, on Friday said that it has filed a draft red herring prospectus (DRHP) with the Securities Exchange Board of India (Sebi) to raise ₹3,600 crore through an initial public offering (IPO).
The airline also plans to raise up to ₹1,500 crore through preferential issue of shares, it said in the DRHP document. A copy of the document has been reviewed by Mint.
A Draft Red Herring Prospectus, also referred to as an offer document, is released when a company is planning to raise capital from the public.
The IPO process of the airline will be managed by ICICI Securities, Citi and Morgan Stanley.
The net proceeds from the IPO will be utilized by the airline to pay off outstanding debt.
Of the ₹3,600 crore the airline hopes to raise from its IPO, the airline plans to utilize ₹2,015.81 crore for payment and schedule repayment of outstanding borrowings, ₹279.26 crore for replacement of letter of credits with cash deposits for securing lease rental payment and maintenance of its aircraft from aircraft lessors and
₹254.93 crore for repayment of dues for jet fuel to Indian Oil Corporation Limited (IOCL), the airline said in the DRHP document. The attempt by the promoters of the airline to raise funds through an IPO comes at a time when the aviation sector has been devastated by the ongoing Covid-19 pandemic.
At present, InterGlobe Aviation Limited (IndiGo) and SpiceJet Ltd are the only listed airlines in the country.
GoAir reported a net loss of ₹1,278.60 crore in FY20 compared with a net profit of ₹123.34 crore during FY19 according to latest figures from the ministry of corporate affairs (MCA).
According to figures compiled by research platform Tofler, the airline’s net worth stood negative at ₹1,500 crore at the end of March 31, 2020 (FY20), while cash and cash
equivalents stood at ₹112 crore.
Indian airlines are expected to incur net losses of about ₹21,000 crore during FY21 following the widespread disruptions caused by the Covid-19 pandemic, and would require additional funding of up to ₹37,000 crore through FY23 to recover from their losses and debt, according to credit rating agency ICRA.
In the DRHP document, the airline warned that the ongoing Covid-19 pandemic had adversely impacted the airline’s operating results, financial condition and liquidity, and another pandemic could result in additional adverse impact to its business.
“..we were unable to make payments under certain of our aircraft lease agreements, supply agreements and agreements with other service providers and have received certain notices for
delayed payments or non-payments,” it said.
“...there is no assurance that we will be able to make all our payments in respect of outstanding obligations and/or as they become due, and these may become subject to disputes relating to non-payment that may have a material adverse impact on our business,” it added. The airline further said that default under several of its aircraft lease agreements could lead lessors to initiate legal proceedings, enforce bank guarantees, appropriate security deposits or repossess aircraft.
“We were also in default under one of our loan agreements,” it added.
As things stand, GoAir is yet to enter into deferral agreements with four lessors that have issued default notices to the airline, according to the DRHP document.