MUMBAI : SpiceJet’s board approved a slump sale of its cargo business to subsidiary SpiceXpress & Logistics for Rs 2,556 crore, a debt swap with aircraft lessor Carlyle Aviation Partners and a fresh round of fundraising to the tune of Rs 2,500 crore through Qualified Institutions Placement (QIP). This restructuring will “substantially reduce the existing liabilities of the Company and will help in fund raising for the business operations of the Company,” said SpiceJet in a regulatory filing.
SpiceJet’s board of directors approved the transfer of its cargo business with SpiceXpress and Logistics (SXPL) on a slump sale basis. All cargo business will be undertaken by SXPL, effective 1 April onwards. The consideration for the sale shall be discharged by issuing securities as both, equity shares and Compulsorily Convertible Debentures (‘CCDs’) totalling Rs 2,556 crore, at valuation of $1.5 billion. These CCDs will be transferred to the aircraft lessors who agree to exchange their lease liabilities for an aggregate amount not exceeding $65.5 million into CCDs of SXPL
The cash-strapped airline’s board also approved the issue of equity shares on preferential basis to aircraft lessors consequent upon conversion of their existing lease liabilities equivalent. The amount will not exceed $29.5 million at price of Rs 48 per equity share or such price as may be determined in accordance with extant preferential issue guidelines, whichever is higher. Additionally, the lessors will also receive CCDs of SXPL.
“Carlyle Aviation Partners picking up a stake in our passenger and cargo business reinforces the huge potential of SpiceJet and SpiceXpress. Carlyle, a global aviation leader, partnering us will tremendously boost our business and this deal would be a transforming moment of change and opportunity for us. The transaction will substantially deleverage our balance sheet thereby allowing us to access fresh funds at a competitive rate and we aim to follow suit with other lessors as well in the near term,” said Ajay Singh, Chairman and Managing Director, SpiceJet.
Depending on the approval of the company’s members, the low cost-carrier will seek to raise up to Rs 2,500 crore. The airline will do this through the issue of eligible securities to qualified institutional buyers.