In a major setback to GoAir’s plans to go public, market regulator SEBI has halted the carrier's IPO process by up to 90 days.
The notification on SEBI's website did not specify any reason for putting these approvals on temporary hold but showed that the IPO application submitted by GoAir has been “kept in abeyance”.
According to reports, the delay is due to the regulator investigating irregularities with GoAir owner Wadia Group’s other holdings. As per the rule, SEBI is "obligated to keep issuance of observations in abeyance for a period of 30 days or 45 days or 90 days or more, as the case may be".
GoAir, which recently branded itself as "Go First", had filed preliminary papers for an initial share sale worth Rs 3,600 crore in May. The proceeds will be mainly used by the airline to pay debt.
The airline plans to pay over Rs 2,015.81 crore towards prepayment or scheduled repayment of all or a potion of certain outstanding borrowings. An amount of Rs 279.26 crore would also be used for “replacement of letters of credit, which are issued to certain aircraft lessors towards securing lease rental payments and future maintenance of aircraft, with cash deposit”.
The airline also intends to repay dues of Rs 254.93 crore to Indian Oil Corporation Limited (IOCL) for fuel supplied to it.
GoAir's plan to go public comes at a time when airlines are severely hit by the Covid-19 pandemic. According to reports, the carrier’s operational cash flow in the first nine months of fiscal year 2021 (April-December 2021) reportedly fell to Rs 232 crores, down by 86.8 per cent year-on-year. At the end of December 31, 2020, GoAir had a net debt of Rs 7,346 crore.