Go First files for IPO at INR 3,600 crore valuation

Low-cost airline GoAir, now rebranded as Go First, filed an addendum to the draft red herring prospectus (DRHP) linked to its INR 3,600-crore initial public offering (IPO) on November 10.

The addendum lists two new objects of issue, apart from making an addition to the risk factors laid down in the DRHP.

“Part-payment of outstanding lease rental of the company’s aircraft leased from certain aircraft lessors,” said one of the two objects. “Part-payment of outstanding amount towards maintenance, repair and overhaul of aircraft,” said the other.

(Image Courtesy – Profit Must)

Regarding outstanding lease rental of GoAir aircraft, the addendum said that an amount of INR 443.97 crore will be used from the net proceeds of the IPO to pay the outstanding amount to aircraft lessors CDB Aviation Lease Finance DAC, Jackson Square Aviation Ireland Limited and ACG Acquisition Ireland III Ltd.

“The company intends to utilise an amount of up to INR 4,439.7 million from the net proceeds towards payment of outstanding lease rental of the company’s aircraft leased,” the addendum noted.

On payment of the outstanding maintenance amount, the addendum said that the company intends to pay INR 96.3 crore to MTU Maintenance Zhuhai Co Ltd from the IPO’s net proceeds.

“The company has entered into an agreement with MTU Maintenance Zhuhai Co Ltd (Vendor) for maintenance, repair and overhaul of the engines, modules and parts of the aircraft owned or operated by the company, which is valid until November 30, 2022,” it said.

“As of November 2, 2021, an aggregate of INR 1,346.7 million is outstanding and payable to the vendor, as communicated by the vendor to the company. The company intends to utilise an amount of up to INR 960.3 million from the net proceeds towards payment of the outstanding dues to the vendor,” the addendum said. The leftover outstanding payable to MTU Maintenance Zhuhai shall be met with by the company from its internal accruals, debt or otherwise, it added.

GoAir has made an addition to the risk related to an outstanding payment under aircraft lease agreements.

“Our objects of the issue include, among other things, (a) 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 to the extent of INR 2,792.6 million to two aircraft lessors; and (b) part payment of outstanding lease rental of our company’s aircraft leased from certain aircraft lessors aggregating to INR 4,439.7 million,” it said.

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