Set to hit the capital markets with Rs 3,268 crore IPO next week, InterGlobe Aviation today said it will retire nearly one-third of its total debt of Rs 3,912 crore from the share-sale proceeds.
InterGlobe Aviation is the holding company of IndiGo airline. The company said it will retire Rs 1,166 crore out of its Rs 3,912-crore debt from the IPO proceeds.
Stating that the airline has not a single penny in working capital or non-aircraft purchase related debt, company President Aditya Ghosh said the entire Rs 3,912-crore debt it has is related to aircraft purchases. Out of its nine years of existence, it has been profitable in seven years, he claimed.
“For us the company turning a negative networth of Rs 139 crore is a non-event”, Ghosh said.
It happened on June 30, when the company declared an interim dividend of Rs 1,500 crore to the promoters. Since then the networth has turned positive and it remains so. As of now “we have a cash balance of over Rs 3,500 crore on our books”, he said.
“We had to report that we had negative networth for disclosure purposes as we happened to file our IPO papers with the Sebi on June 30. But let me repeat, that is a non-event as far as IndiGo and InterGlobe are concerned, ” Ghosh said while formally announcing the IPO.
When asked about hefty payouts the promoters have been getting all these while, he said, “As a manager my mandate is to keep my customers happy, my employees happy and also investors/shareholders. I have been doing as a private company and will continue to do so as public company going forward.”
Ghosh said the company will launch its Rs 3,268-crore public issue, the first from the airline sector after the Spicejet IPO, on October 27 which will remain open till October 29. The Rs 10-share has been priced at Rs 700-765.
The public issue includes a share premium consisting of a fresh issue aggregating up to Rs 1,272.2 crore and offer for sale of up to 26,112,000 shares, comprising 3,290,419 shares by InterGlobe Enterprises; 3,006,000 shares by Rahul Bhatia who will retain just 40,000 share post-issue thus practically exiting the airline’s direct holding.
When asked about the public perception about Bhatia, who has been the face of the airline from day one, Ghosh said that even after the issue both the key promoters (Bhatia and Rakesh Gangwal) will hold over 47 per cent each in the holding company, which in turn own the airline.”
IndiGo had increased the pricing on the issue to Rs 700-765 after the promoters decided to divest lesser number of shares. Earlier, the plan was that existing shareholders would sell up to 3.01 crore shares but as per the final offer document, this quantum has been reduced to 2.61 crore shares.
InterGlobe had reported Rs 640.44 crore in net income in the June quarter but its net worth slipped to a negative Rs 139.39 crore as of end June.
“The net worth of our company was Rs 426.22 crore and (-) Rs 139.39 crore as of March 31, 2015 and June 30, 2015, respectively, as per the restated financial statements of our company prepared in accordance with Indian GAAP and restated in accordance with the ICDR Regulations,” it said in the offer document.
Noting that it had a net negative worth at the end of June, InterGlobe said if this financial position continues, it may be “more difficult or expensive to obtain future financing or meet our liquidity needs”.
“Further, there can be no assurance that we will be able to achieve a positive net worth in periods going forward,” the document said.
Net worth is the aggregate of the paid-up share capital, share premium account, reserves and surplus. The figure excludes aggregate of miscellaneous expenditure. A negative net worth implies the company’s liabilities are more than its assets.
In the June quarter, IndiGo posted total revenue of Rs 4,317.19 crore. For the year ended March 2015, the carrier recorded a net profit of Rs 1,295.58 crore on revenues of Rs 14,309.14 crore.
The Gurgaon-based entity is also the largest domestic carrier by market share, having flown over one-third of the total passenger traffic carried by Indian airlines in August.
The other shareholder who will be divesting stake include another equal promoter Rakesh Gangwal divesting 3,759,638 shares, 601,200 by Anil Chanana; 149,900 by Asha Mukherjee; 300,600 by Kunal Chanana; 6,012,000 by Newton Bruce Ashby; 100,200 by Sanjay Kumar; 84,000 by Shakti Swarup Lumba; 2,227,316 by Shobha Gangwal; 1,442,000 Steven Eugene Harfst; 1,503,000 by Paul Carl Schorr, Iv (Nominee of G5 Investments) and 3,635,727 by
The Chinkerpoo Family Trust in which Shobha Gangwal is a trustee & JP Morgan Trust Company of Delaware).
The global coordinators & book running lead managers to the issue are Citigroup India, JP Morgan India and Morgan Stanley India, while the book running lead managers are Barclays, Kotak Mahindra Capital Company and UBS Securities India.