SpiceJet to reduce liabilities, make SpiceXpress a separate entity

The budget airline SpiceJet has decided to cut off its current liabilities, and in that direction establish its cargo arm as a separate business entity by 1st April 2023. The airline’s board also proposed raising fresh capital of up to INR 2,500 crore by issuing securities to qualified institutional buyers.

SpiceXpress and Logistics Private Limited (SXPL) will be issuing equity shares as well as Compulsorily Convertible Debentures (CCDs) worth INR 2,555.77 crore to its parent company SpiceJet, thereby considerably reducing the latter’s debt. SpiceJet’s Board of Directors has also approved to convert its outstanding lease liabilities to aircraft lessor Carlyle Aviation Partners into equity. SpiceJet will convert shares worth around USD 29.5 million at a price of INR 48 per equity share.

The board of directors of the company has agreed to enter into a business transfer agreement with its subsidiary SXPL, for transfer of its cargo business undertaking as a going concern, on slump sale basis, the airlines says in a stock exchange filing. Following the announcement by SpiceJet, its shares of rose 3% in intraday trade to INR 41.70 apiece on the National Stock Exchange (NSE).

“As a part of ongoing restructuring with aircraft lessors Carlyle Aviation Partner (or its affiliated entities) and other aircraft lessors, all these CCDs will be transferred to those aircraft lessors who agree to exchange their lease liabilities for an aggregate amount equivalent to total nominal value of such CCDs in accordance with the relevant provisions of applicable laws and receipt of applicable regulatory approvals, as may be required,” the filing says.

Net profit of low-cost carrier SpiceJet surged 160% year-on-year to INR 110 crore for the quarter ended December 31, 2022, aided by strong performance in both passenger and cargo businesses. The airline clocked the highest domestic passenger load factor, the percentage of available seating capacity filled with passengers.

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