New Delhi [India], April 3 : Aiming to boost growth in the cargo business, SpiceJet said it has completed the hive off of its cargo and logistics division 'SpiceXpress' into a separate entity SpiceXpress and Logistics Private Limited. It is effective from April.
SpiceXpress and Logistics Private Limited is a subsidiary of SpiceJet
The hive off is expected to pave a way for SpiceXpress to raise funds independently, SpiceJet said in a release on Monday.
"The hive off would strengthen SpiceJet's balance sheet, wipe out a substantial portion of the Company's negative net worth and unlock significant value for the Company and its shareholders," the release said.
"The consideration for the slump sale shall be discharged by SpiceXpress by the issuance of securities in the combination of equity shares and compulsorily convertible debentures to SpiceJet for an aggregate amount of Rs 2,555.77 Crore which will also strengthen the balance sheet of SpiceJet."
Ajay Singh, Chairman and Managing Director, SpiceJet, said the separation of the cargo arm is a stepping stone in its growth story which he said will unfold in the times to come.
"SpiceXpress will provide a greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business to accelerate its growth. The decision to hive off SpiceXpress is in sync with our long-term business plan and will unlock significant valuation of the logistic business. Both SpiceJet and SpiceXpress have great potential and will complement each other well."
"The hive-off will not only enable SpiceXpress to raise cash independently, it will significantly reduce SpiceJet's negative net worth. Having restructured over USD 100 million, outstanding dues to Carlyle Aviation Partner last month, the hive-off will further strengthen and deleverage our balance sheet," Singh added.
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