SpiceJet, India’s second-largest airline by passengers, will hive off its cargo and logistics services via a slump sale to subsidiary SpiceXpress and Logistics Pvt Ltd.
The low-cost airline said with this transfer it plans to unlock significant value for SpiceJet and its shareholders.
The logistics business has been valued at Rs 2,555.77 crore and the purchase consideration shall be discharged by SpiceXpress by issuance of its shares to SpiceJet, subject to necessary approvals.
The transfer will be along with all related assets and liabilities, including know-how, trademark, licences, franchises, customer contracts, and distribution network.
SpiceXpress is expected to operate as a separate entity upon transfer of business on or around October 1, 2021.
While SpiceXpress will operate as a separate entity, SpiceJet will continue to provide certain transportation services, ground and logistics support, management services, sharing and provisioning of resources, etc.
The airline has also sought shareholders’ nod to raise up to Rs 2,500 crore via issuance of eligible securities through Qualified Institutional Placement (QIP).
In March this year, SpiceJet announced its tie-up with US investor Avenue Capital for financing, acquisition, sale and lease‐back of up to 50 new aircraft.
Ajay Singh, chairman and managing director of SpiceJet, said, “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. SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth.”
Currently, the logistics arm has a network which spans over 68 domestic and over 110 international destinations including US, Europe and Africa.
As per the latest reporting by the company for the quarter ended June 30, 2021, the logistics arm reported a net profit of Rs 30 crore on a revenue of Rs 473 crore.