Go Airlines plans to raise Rs 3,600 cr via IPO

On getting approval from the regulator, it will become the third operational airline to go public after Indigo and SpiceJet

NEW DELHI:  Wadia Group-controlled Go Air, which has rebranded itself as GoFirst, has filed preliminary papers to raise as much as Rs 3,600 crore through an initial public offering (IPO) in a bid to pare debt. Currently, only Indigo and SpiceJet are listed.

The budget carrier has proposed an IPO of equity shares through a 100 per cent book-building process in accordance with Securities and Exchange Board of India (Sebi), according to its draft red herring prospectus (DRHP).

The company said it is in consultation with its lead managers and may consider a pre-IPO share issue of up to Rs 1,500 crore prior to filing the RHP. In that case, it said, the IPO size will be reduced. Proceeds from the issue will be used to repay all, or a portion of, certain outstanding borrowings up to Rs 2,015.81 crore.

As much as Rs 279.26 crore will 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 company will use Rs 254.93 crore for repayment of dues to Indian Oil Corporation in part or full for fuel supplied. 

As of December 2020, the company’s total borrowings including current maturities and vehicle loans were at R2,036.21 crore, and cash equivalents were at R11.64 crore. “We expect our financial position to be improved by this reduction in debt coupled with our cost management and reduction measure and the anticipated growth in our business. 

We will continue to focus on strengthening and improving our overall capital structure to allow us to invest in the growth of our business by adding more aircraft as well as expanding our network”, the company said in its DRHP. The 15-year-old carrier seeks to raise funds as the aviation industry faces significant business as a result of the Covid-19-induced restrictions. 

Go Airlines Ltd has recorded a net loss of `470 crore and revenues of Rs 13,194 crore in the nine months ended December 31, 2020. The airline said that it has a negative net worth amounting to Rs 1,916 crore. 

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