SpiceJet gains as board approves raising Rs 2,500 cr via QIP, slump sale of cargo biz

SpiceJet rallied 3.27% to Rs 41 after the low-cost air carrier said that its board has approved a proposal to raise fresh capital of up to Rs 2,500 crore through qualified institutions placement (QIP).

In an exchange filing, SpiceJet said, the board of directors of the company has proposed to seek enabling approval of members of the company for raising fresh capital of upto Rs 2,500 crore through issue of eligible securities to qualified institutional buyers.

Further, the company's board approved the transfer of its cargo business to its subsidiary, SpiceXpress and Logistics (SXPL) on a slump sale basis for a consideration of Rs 2,555.77 crore. Accordingly, the cargo business will be exclusively undertaken by SXPL effective 1 April 2023.

The consideration for said transfer of cargo business undertaking shall be discharged by SXPL by issuance of securities in the combination of equity shares and compulsorily convertible debentures (CCDs) to the company for an aggregate amount of Rs 2,555.77 crore, SpiceJet stated in the press release.

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.

SpiceJet said this restructuring will substantially reduce the existing liabilities and will help in fund raising for the business operations of the company.

The firm's board has also approved the issue of equity shares on a preferential basis to the aircraft lessors based upon the conversion of their existing lease liabilities equivalent to an amount not exceeding $29.5 million at a price of Rs 48 per equity share.

Another proposal approved by the board is the exchange of its outstanding lease liabilities for an aggregate amount not exceeding $65.5 million into CCDs of SXPL, which is held by SpiceJet.

As part of the restructuring with aircraft lessor CLSEC Holdings 10 DAC, (affiliate of Castlelake), and in order to acquire two Boeing 737-800 airframes, the board has in-principally agreed to purchase the entire share capital of AS Lease 41 (Ireland) from CLSEC Holdings 10 DAC.

SpiceJet is a low-budget air carrier. The airline operates a fleet of Boeing 737s, Q-400s & freighters and is the country's largest regional player operating 63 daily flights under UDAN or the Regional Connectivity Scheme. The airline also operates a dedicated air cargo service under the brand name SpiceXpress offering cargo connectivity across India and on international routes.

The company reported standalone net profit of Rs 106.82 crore in Q3 FY23, steeply higher than Rs 23.28 crore posted in Q3 FY21. Total revenue from operations rose 2.7% YoY to Rs 2,261.13 crore during the quarter ended 31 December 2022.

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