Budget carrier SpiceJet on Monday said it has hived off its cargo and logistics business SpiceXpress into a separate entity — SpiceXpress and Logistics Pvt Ltd from April 1, which will result in a one-time gain of Rs 2,555.77 crore for SpiceJet, substantially reducing its negative net worth

The restructuring paves the way for SpiceXpress to raise funds independently, SpiceJet said.

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, SpiceJet Ltd chairman Ajay Singh said.

SpiceXpress reported a net profit of Rs 51.4 crore for the April-December period of FY23.

"In a bid to boost the growth of its cargo business and provide a more streamlined and efficient service to its customers, SpiceJet Ltd has completed the hive off of its cargo and logistics division 'SpiceXpress' into a separate entity, SpiceXpress and Logistics Private Limited," the company said.

The consideration for the slump-sale will be discharged by SpiceXpress by the 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, it said.

According to Singh, "SpiceXpress will provide greater and differentiated focus to cargo and logistics business and will allow the possibility of raising capital for the business."

"The separation of our cargo and logistics arm is a stepping stone in our growth story which shall unfold in the times to come".

He also said that 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," Singh said.

In February, Carlyle Aviation Partners agreed to convert its outstanding lease rental in SpiceJet into 5 per cent equity. The Carlyle Group firm had the largest exposure among lessors. After the conversion, Carlyle Aviation Partners' stake will be 7.5 per cent.