Airline SpiceJet has spun off its cargo and logistics division, SpiceXpress, into a separate entity, paving the way for the company to raise funds independently. The hive off is aimed at the airline’s aim to grow its cargo business as well as provide a more streamlined and efficient service to customers.
The separation took effect from April 1. The airline said the closure of hive would strengthen its balance sheet and erase a significant portion of its negative net worth and unlock significant value.
The distress sale consideration will be exhausted by SpiceExpress through the issuance of securities including equity shares and compulsorily convertible debentures for an aggregate amount of Rs 2,555.77 crore. The amount is also expected to strengthen SpiceJet’s balance sheet.
Ajay Singh, Chairman and Managing Director, SpiceJet, said, “The demerger of our cargo and logistics arm is a step in our growth story that will unfold in the future. SpiceExpress will provide a greater and differentiated focus on the cargo and logistics business and allow the potential to raise capital to accelerate the growth of the business.”
