Budget airline SpiceJet has received shareholders' nod to raise Rs 2,500 crore through issuance of shares under a QIP.
In financial parlance, eligible securities are issued through a Qualified Institutions Placement or QIP to raise funds.
Besides, shareholders gave their assent to transfer the company's cargo and logistics services business to its subsidiary, "SpiceXpress and Logistics Private Limited" (SpiceXpress) as a going concern, on slump sale basis valued at Rs 2,555.77 crore.
Accordingly, the consideration for the slump sale shall be discharged by SpiceXpress by issuance of its shares in favour of SpiceJet.
The transfer of the logistics business will result in a one-time gain of Rs 2,555.77 crore for SpiceJet wiping out a substantial portion of the company's negative net worth.
As of June 30, 2021, SpiceJet had a negative net worth of Rs 3,300 crore.
Furthermore, the company said that the proposed transfer, with separate and enhanced management focus, will provide greater opportunity and flexibility in pursuing long-term growth plans and strategies for SpiceXpress business.
"The transfer of the logistics business to SpiceXpress will reduce SpiceJet's negative net worth by Rs 2,555.77 crore and strengthen our balance sheet significantly," said Ajay Singh, Chairman and Managing Director, SpiceJet.
"Post the transfer of the logistics business, the new company will be able to raise capital independently of SpiceJet to fund its growth. We have also received shareholder approval to raise funds through a QIP ensuring our long term growth plans remain intact."
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