Go Airlines, which has rebranded itself as 'Go First', has filed preliminary papers for an initial share sale worth Rs 3,600 crore and the proceeds will be mainly used to repay dues amid the aviation industry facing strong headwinds due to the coronavirus pandemic.
After taking to the skies 15 years ago, the Wadia group-promoted budget carrier -- which has ambitious expansion plans -- is looking to mop up the amount through issuance of fresh equity shares. It also has plans to raise up to Rs 1,500 crore by way of a pre-IPO placement.
Once the shares get listed, Go Airlines (India) Ltd will be the third operational scheduled carrier after SpiceJet and IndiGo to trade on Indian bourses.
In a release on Friday, Go Airlines said it has filed a draft red herring prospectus (DRHP) for an initial public offer (IPO) to raise up to Rs 3,600 crore through issuance of fresh equity shares.
"We expect competitive conditions in our industry to intensify further as new entrants emerge and as existing competitors seek to extend their operations and flight frequencies over routes that we operate," as per the DRHP.
It also noted that the aviation industry faces significant business challenges as a result of the Covid pandemic.
In the financial year ended March 2020, the airline had a loss of Rs 1,270.74 crore while total income stood at Rs 7,258.01 crore.
"Our company expects to receive the benefits of listing of the equity shares, including to enhance our visibility and our brand image among our existing and potential customers and to create a public market for our equity shares in India," the DRHP said.
From the net proceeds of the IPO, the airline plans to pay over Rs 2,015.81 crore towards prepayment or scheduled repayment of all or a portion of certain outstanding borrowings".
An amount of Rs 279.26 crore would be for "replacement of letter of credits, which are issued to certain aircraft lessors towards securing lease rental payments and future maintenance of aircraft, with cash deposit", as per DRHP.
Also, the airline will make repayment of dues of Rs 254.93 crore to Indian Oil Corporation for fuel supplied to it.
"A further issue of equity shares, through a preferential offer or any other method as may be permitted in accordance with applicable law, aggregating up to Rs 15,000 million, which may be undertaken by our company... prior to the filing of the Red Herring Prospectus with the RoC (registrar of companies)," it noted.
The Wadia group owns 73.33 per cent stake in the carrier while the remaining shareholding is with other entities, including Baymanco Investments. The latter holds 21.05 per cent stake.
Others are Sea Wind Investment and Trading Company (3.76 per cent shareholding), Heera Holdings & Leasing, Nidhivan Investments & Trading Company and Sahara Investments -- all the four entities have 0.62 per cent stake each in the airline.
As per the DRHP, there are a total of 99 litigations against the company, including 43 related to actions by statutory or regulatory authorities.
Global coordinators and book running lead managers to the issue are ICICI Securities, Citi and Morgan Stanley.
The airline is now focusing on ultra low cost carrier (ULCC) model.
After announcing rebranding on Thursday, Go First CEO Kaushik Khona said the airline has stayed resilient during the really tough times of the past 15 months.
"Even as the times continue to be extraordinary, Go First sees opportunities ahead. This rebranding reflects our confidence in the brighter tomorrow," he had said.
The airline has placed firm orders for delivery of 144 Airbus A320 neo planes; and out of them, it has taken delivery of 46 aircraft.
As on January 31, 2020, GoAir operated flights to 28 domestic and 9 international destinations.
At present, three scheduled carriers are trading on the domestic bourses -- IndiGo, SpiceJet and Jet Airways. Jet Airways shuttered operations in April 2019.