SpiceJet asks for approval by its shareholders to kickstart cargo

During a stock exchange notification, SpiceJet said it appealed through postal ballot for “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”).”

No-frills carrier SpiceJet Limited had proclaimed in July regarding the plans to kickstart its cargo operations into a separate association and has consulted its shareholders to complete the procedure.

During a stock exchange notification, SpiceJet said it appealed through postal ballot for “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”).”

In July, the airline had appealed to its shareholders for Rs2,500 crore via., a QIP (Qualified Institutional Placement), it averred in the stock exchange notification.

SpiceJet said in a separate statement that: its logistics business has been valued at Rs2,555.77 crore based on an independent valuation exercise and the purchase consideration for the same shall be discharged by SpiceXpress by the issuance of shares of SpiceXpress to SpiceJet, subject to necessary approvals.

The airline further added that “it expects SpiceXpress to operate as a separate entity upon transfer of business on or around 1 October.”

“The proposed transfer of the 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, chairman and managing director, SpiceJet Ltd.

“SpiceXpress will also be able to raise capital independent of SpiceJet to fund this growth,” Singh added.

SpiceJet reported its sixth successive loss of 731.12 crore at a single quarter for its three month period that concluded on 30 June, due to the decline in traffic.

Walker Chandiok & Co LLP, the auditors of SpiceJet, have yet again expressed doubts about the airline’s potential to continue pertaining to the peak losses that have led to complete wash-off of net worth, including current liabilities exceeding assets by 6,044.91 crore by 30 June.

“SpiceJet (SJet) continues to maintain momentum in the cargo business with Q1FY22 net profit of Rs300mn ( 30 crore) for the ‘logistics platform’. Recapitalisation remains the key trigger for the business,” read a 16 August research report on SpiceJet by Icici Securities.

Source Mint
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