SpiceJet hives off cargo and logistics business into separate entity  

SpiceJet 1

SpiceJet completed the separation of its cargo and logistics division 'SpiceXpress' from the airline.

The low-cost carrier entered into a Business Transfer Agreement with its subsidiary namely SpiceXpress and Logistics Private Limited (SXPL) for the transfer of its cargo business undertaking as a going concern, on slump sale basis.

The hive-off would strengthen SpiceJet's balance sheet, wipe out a substantial portion of the airline's negative net worth and unlock significant value for SpiceJet and its shareholders.

According to the airline, the consideration for the slump sale will be discharged by SpiceXpress by 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.

"The separation of our cargo and logistics arm is a stepping stone in our growth story which shall unfold in the times to come," SpiceJet's Chairman Ajay Singh said.

SpiceXpress reported a net profit of Rs 51.4 crore for the April-December period of FY23. SpiceJet's cargo operations contributed to nearly 30 percent of its revenues in 2021-22 as revenue of Rs 19,436.10 million was generated by the cargo business.

According to the Spicejet CMD, the decision to hive off SpiceXpress is in sync with the company's long-term business plan and will unlock significant valuation of the logistic business.

“The hive-off will not only enable SpiceXpress to raise cash independently, it will significantly reduce SpiceJet’s negative net worth. Having restructured over $100 million, outstanding dues to Carlyle Aviation Partner last month, the hive off will further strengthen and deleverage our balance sheet," he said.