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SpiceJet not to sell stake to Mallya

Amidst speculations on change of ownership at budget carrier SpiceJet, its main promoter Bhupendra Kansagra says that he will stay invested in the airline, reports Lalatendu Mishra.
None | By Lalatendu Mishra, Mumbai
UPDATED ON JUL 06, 2008 11:51 PM IST

Amidst speculations on change of ownership at budget carrier SpiceJet, its main promoter Bhupendra Kansagra said he had no plans to exit and would stay invested in the airline. This could put to rest speculations that SpiceJet promoters were contemplating a sale of stake as the airline needs fresh infusion of funds at a time when the aviation sector is in dire straits.

Kansagra, the London-based business tycoon of Indian origin along with his family-owned Royal Holdings holds little less than 13 per cent stake in SpiceJet. The Tatas, who hold 7 per cent stake in SpiceJet, is keen on raising stake in the long-term

“I am into SpiceJet for the last eight years and will stay invested as long as I can,” Bhupendra Kansagra told Hindustan Times over phone from London. Kansagra denied eports on his purported move to sell his stake to the UB group.

“We are not selling (stake in SpiceJet) and I have not met anyone so far to discuss anything relating to sale,” Kansagra said. Senior officials at Vijaya Mallya controlled UB group and Kingfisher Airlines also denied any concrete proposal to acquire a controlling stake in SpiceJet.

Rumours of stake stale has been pushing up SpiceJet share price. Rumours started after the SpiceJet stock plunged to Rs 20.50 on July 2, 2008 its 52 weeks low as compared to Rs 104.80 quoted on January 8, 2008. By July 4, stock price recovered to Rs 25, though basic outlook on the aviation sector remained unchanged.

Like all airlines, SpiceJet is in need of fresh funding to continue its operations.

The airline for the financial year 2007-08 reported a net loss of Rs 133 crore against Rs 78 crore in the previous year primarily on account of rising jet fuel prices and depleting passenger traffic owning to increase in airfares.

According to airline executives, the airline would require $100 million funding to meet future financial requirements. “We are looking to raise money but no decision has taken place,” Kansagra said.

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