A draft red herring prospectus (DRHP) has been filed by GoAir India Private Limited with the Securities Exchange Board of India (SEBI) in order to raise ₹3,600 crore through an initial public offering (IPO).
The airline intends to raise Rs.3,600 crore via a fresh issue of shares wherein The company has proposed to issue shares through a preferential issue or any other method to raise up to ₹1,500 crore.
The company stated in its prospectus, “The reduction of our overall debt will reduce interest costs and improve our lease rate factors. 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”.
Lead Managers on this issue are ICICI Securities, Citigroup Global Markets India and Morgan Stanley.
Proceeds from the issue will be utilized in the repayment of or a portion of certain outstanding borrowings which are up to ₹2,015.81 crore. ₹279.26 crore will be used towards the replacement of letters of credit which are issued to certain aircraft lessors for securing lease rental payments and future maintenance of aircraft with cash deposit. This would leave the airline with a little over Rs.1,000 crore for its future expansion and other corporate needs which may not be enough given the circumstances.
In its DRHP filing, the company explained, “For the month of December 2020, our departures were at approximately 63 per cent of the departures during December 2019 and our growth ASKs were at approximately 72 per cent of the pre-Covid-19 levels. This has led to a sudden and significant decline in our revenues and profitability from late February 2020 and as a result, we recorded a net loss of ₹4,706.9 million in the nine months ended December 31, 2020.”
The company also had to undertake a retrenchment of its employees across all departments. During the lockdown, it also initiated graded pay cuts for managerial staff who were working with non-paid leaves, with CEO getting the major salary cut starting with 50 percent which extended downward in the hierarchy to 5 per cent. “From April 2020 to June 2020, approximately 3,800 employees were put on furlough, post which we started employing due to increase in the business,” the company stated.
It further explained, “We also had to raise funding from a Wadia group company to increase our liquidity by way of an equity infusion and non-fund-based support. We raised ₹ 970 million as equity and non-fund-based support of $50 million was arranged through our subsidiary, Go Singapore during Fiscal 2020. In Fiscal 2021, we availed of an additional fund-based (including non-fund based sub-limits) line of credit of ₹ 5,000 million from ICICI Bank Limited. We have been further sanctioned an additional facility of ₹ 3,420 million by Deutsche Bank AG, which we have fully availed. We recently raised ₹ 5,460 million as equity from Baymanco Investments Limited, a member of our Promoter Group.”