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SpiceJet denies move to offload stake

SpiceJet denies move to offload stake
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First Published: Mon, Jun 18 2007. 08 01 PM IST
Updated: Mon, Jun 18 2007. 08 01 PM IST
New Delhi: Low-cost carrier SpiceJet, which is being eyed by other airlines including Vijay Mallya’s Kingfisher, on 18 June denied any move to offload stake, and said it has adequate resources to fund expansion plans.
“SpiceJet would like to reiterate that there is absolutely no plan to sell any stake in the company to anybody. It is one of the best funded airlines in the country with a large cash reserve for expansion,” an airline spokesperson said in a statement.
SpiceJet Director Ajay Singh said SpiceJet’s promoters can’t sell their stake until February 2008, according to an agreement between them.
Royal Holding Services, which owns 12.91% of SpiceJet, is one of the founders of the airline, along with investors such as Singh, who has a 4.16% stake, according to the SpiceJet Web site. Istithmar holds 13.42% in the airline.
SpiceJet is spending as much as $400 million to buy 10 new Boeing Co. planes. The airline, which started flights in May 2005, aims to carry 6 million passengers in the current financial year, Singh said on May 22.
Terming reports of a stake sale as ”speculative”, the company said it currently has no plans to raise any money. It has ordered ten Boeing 737-800 worth $700 million which indicate its coffers are strong, the company said.
”In January, SpiceJet raised $67 million through a preferential allotment. The shares have a lock-in period of 12 months. Our stakeholders are long-term investors and have strongly dismissed speculation of any stake sale,” the company added.
The denial comes amid reports that Paramount Airways and Vijay Mallya, who acquired controlling stake in Air Deccan last month, are interested in SpiceJet as well.
”I am interested in SpiceJet, but I am not a predator,” Mallya had said last week.
Shares surge
Meanwhile, during the day shares of SpiceJet Ltd. gained after a television report said Paramount Airways is seeking to buy a stake.
Paramount, which operates mostly in southern India, plans to buy stakes held by Royal Holding Services Ltd. and Dubai, United Arab Emirates-based Istithmar in SpiceJet, CNBC TV18 reported, without saying where it got the information.
Shares of SpiceJet advanced Rs 2.2, or 3.8%, to 59.65 at the close of trading on the Bombay Stock Exchange today, having risen as much as 6% earlier.
Paramount refused to give any details on the stake it was seeking to acquire.
“We are talking to airlines in India,” M. Thiagarajan, managing director of Paramount, said. “We are interested in acquisitions. But specifically, I cannot comment on any one.”
Paramount is looking to acquire another airline for gaining access to landing slots and parking bays, Thiagarajan said in a telephone interview.
“That will facilitate our expansion much faster than otherwise,” Thiagarajan said. “We are prepared to acquire another airline. We are in dialogue.”
Paramount may place orders for as many as 40 planes from Empresa Brasileira de Aeronautica SA, or Embraer, Thiagarajan said. It will decide on the orders this year, the airline’s managing director said.
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First Published: Mon, Jun 18 2007. 08 01 PM IST