SpiceJet shares climb 6% on slump sale of cargo biz, Rs 2,500 crore QIP

Shares of SpiceJet Ltd climbed 6 per cent in Monday's trade after the domestic airline operator announced a slump sale of its cargo business undertaking to its subsidiary SpiceXpress and Logistics. Spicejet said Carlyle Aviation to pick up 7.5 per cent stake in the aviation company. Besides, the aviation company announced its intention to come up with a Rs 2,500 crore in qualified institutional placement (QIP) within a year.

The slump sale transaction will wipe out over $100 million debt of SpiceJet, strengthening its balance sheet for future expansion, the company said. Following the development, the stock rose 6.29 per cent to hit a high of Rs 42.20 on BSE.

SpiceJet said it will be issuing fresh equity shares of $29.5 million or Rs 244.28 crore to Carlyle Aviation Partner.
Following this transaction, Carlyle Aviation Partner will have over 7.5 per cent equity stake in SpiceJet.

Chairman and Managing Director Ajay Singh said: “Carlyle Aviation Partners picking up a stake in our passenger and cargo business reinforces the huge potential of SpiceJet and SpiceXpress. Carlyle, a global aviation leader, partnering us will tremendously boost our business and this deal would be a transforming moment of change and opportunity for us. The transaction will substantially deleverage our balance sheet thereby allowing us to access fresh funds at a competitive rate and we aim to follow suit with other lessors as well in the near term.”

SpiceJet will transfer compulsorily converted debentures (CCDs) of SpiceXpress and Logistics (SXPL), held by SpiceJet, aggregating to $65.5 million, subject to regulatory approvals. The CCDs will be converted into equity shares of SpiceXpress at an anticipated future valuation of $1.5 billion or Rs 12,422 crore.

Additionally, the SpiceJet Board, as a part of restructuring with aircraft lessor CLSEC Holdings 10 DAC, an affiliate entity of Castlelake, has in-principally agreed to acquire two Boeing 737-800 airframes by purchasing entire share capital of AS Air Lease 41 (Ireland) Limited from CLSEC Holdings 10 DAC (affiliate entity of Castlelake).

Meanwhile, SpiceJet said its board has also proposed to seek enabling approval of members of the company, which will be valid for 365 days from the date of passing of the resolution, for raising fresh capital of up to Rs 2,500 crore through issue of eligible securities to qualified institutional buyers, in accordance with the relevant provisions of applicable law and subject to receipt of applicable regulatory approvals, as may be required.

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