SpiceJet seeks nod to hive off cargo business
NEW DELHI: SpiceJet Ltd on Tuesday sought approval from its shareholders to its proposal to carve out the cargo business into a separate entity.
The budget airline said, in a regulatory filing, that it is seeking approval through postal ballot for the ‘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”)”.
Loss-making SpiceJet had in July announced plans to hive off the cargo operations which continued to grow during the pandemic due to demand for transporting
vaccines.
Passenger flights, however, faced several government restrictions while many potential fliers also stayed away for fear of contracting infection.
In its exchange notification, the carrier also sought shareholder approval to its plan, announced in July, to raise up to
₹2,500 crore through a QIP (qualified institutional placement).
In a separate statement, the low-cost carrier said its logistics business has been valued at ₹2,555.77 crore based on an independent valuation exercise and the purchase consideration for the same will be carried out by SpiceXpress through issuance of shares of SpiceXpress to SpiceJet, subject to receipt of all approvals.
The airline said it expects SpiceXpress to operate as a separate entity upon completion of the transaction on or around October 1.
“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, SpiceJet’s chairman and managing director. “SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth,” he said.
SpiceJet has incurred its sixth consecutive quarterly loss at ₹731.12 crore for the June quarter as the pandemic crimped demand for air travel.