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BW Businessworld

2G Probe Hits Spicejet Fund Raising Plans

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Budget carrier SpiceJet expects fund raising to be "challenging," after media reports that linked the firm's majority owner Kalanithi Maran to a massive corruption scandal, its chief executive said on Friday.

Textile minister, Dayanidhi Maran, the younger brother of SpiceJet's majority owner, was named in a lawsuit related to a telecom probe, media reports said on Thursday. Kalanithi Maran owns 38.7 percent stake in SpiceJet.

CEO Neil Mills said "it is very unfortunate for us to get associated with this anyway, because we do not have anything to do with it. But how do you stop that association other than keep confirming that we are not involved?"

SpiceJet shares plunged 16 percent on Thursday after the Central Bureau of Investigation also confirmed a preliminary probe against Dayanidhi Maran, who was telecom minister from 2004 to 2007.

SpiceJet needs $200-250 million to fund aircraft purchases in 2011/12, which will be raised through a share sale and export credit.

Mills said fund raising will happen in the next 9-12 months, but the company is yet to finalise exactly how much it will raise.

"It will be challenging. But raising capital in airlines is always challenging. We believe as we have a successful business and profitable, unlike many of our peers, with a good prospect going forward," he said.

"I don't think it will be impossible at all," he said.