Kingfisher to seek ‘open offer’ waiver for foreign investor

New Delhi, Dec. 21:

Kingfisher Airlines plans to approach SEBI for a one-off exemption from open offer obligations under the takeover code to any foreign carrier that may pick up a majority stake in the ailing private carrier.

This was conveyed to the 17-bank consortium during the recent meeting that the lenders had with the KFA promoter, Vijay Mallya, in Mumbai this week, sources in the banking industry said.

Mallya is reportedly in talks with a couple of foreign carriers, including Etihad Airways, to induct one of them as a majority stakeholder in the airline.

If the capital market regulator (SEBI) were to allow any exemption on open offer obligations, then the overall cost of acquiring the grounded airline is expected to come down for the foreign carrier.

SEBI’s takeover code requires any acquirer getting 25 per cent or more stake in a company to make an “open offer” for additional 20 per cent stake.

This has been mandated to give an opportunity for minority shareholders to exit the company on account of any change in management.

The Government had recently allowed foreign carriers to take up to 49 per cent stake in domestic airlines.

At the recent meeting, Mallya is also understood to have conveyed to the bankers that the company had not proceeded with the earlier planned viability study by SBI Caps as the potential investors (foreign carriers) were convinced about KFA’s own long-term revival plan presented to them.

He had also promised one more month of salary to be disbursed to KFA employees during December.

Bankers’ demand

The 17-bank consortium had, at the recent meeting, decided that Mallya’s request for non-fund based support for the limited restart plan could be accepted only after 100 per cent collateral for such support is furnished to the lenders.

Srivats.kr@thehindu.co.in

(This article was published in the Business Line print edition dated December 22, 2012)

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