MUMBAI: Lenders to bankrupt Kingfisher
AirlinesBSE -0.21 % have decided to take legal action against the airline company
for its failure to repay over 7,000-crore debt despite repeated reminders.
Lenders had been pursuing a soft approach so far in the hope that the company, which has not paid interest on its loans for more than a year now, can be persuaded to come out with a revival plan. But their patience seems to be running out now.
"On Friday, it became clear that banks are running out of patience," said a banker who attended last week's meeting between lenders and the company in Bangalore. "The meeting was called to give a final hearing to the borrower before lenders decided pull the plug," he said.
This is the first time that lenders are discussing recovery measures. Officials who attended the meeting said that lenders' initially step would be to issue a legal notice to the airline.
"In the past some banks, including the lead bank,State Bank of IndiaBSE 1.02 %, felt that the airline could be given a second chance since lenders have anyway waited for a year," a senior bank official said.
The company began showing signs of weakness in November 2011 when it ran out of money to operate most of its flights and started reducing its flights to cut cost. The airline, which has never made a profit, also failed to pay salaries to its employees for a long time following which the employees went on an indefinite strike. Its flying licence was finally suspended in October 2012
Lenders have declined to provide additional loan to the airline until it repays its dues and infuses fresh equity in the company. Kingfisher agreed to infuse 425 crore to restart the operations but said that this would be conditional on banks providing guarantees, which the banks have refused.
Lenders gave Kingfisher Airlines close to 7,500 crore and acquired 20% stake in the company on account of conversion of part debt into equity in 2010. However, banks have limited collateral making it imperative for them to write-off a huge portion of loan. The collateral include a Goa Villa, Kingfisher House in Mumbai and some shares of United SpiritsBSE -0.69 %.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/lenders-to-drag-kingfisher-to-court-for-its-failure-to-repay-7000-crore-debt/articleshow/17932340.cmsLenders had been pursuing a soft approach so far in the hope that the company, which has not paid interest on its loans for more than a year now, can be persuaded to come out with a revival plan. But their patience seems to be running out now.
"On Friday, it became clear that banks are running out of patience," said a banker who attended last week's meeting between lenders and the company in Bangalore. "The meeting was called to give a final hearing to the borrower before lenders decided pull the plug," he said.
This is the first time that lenders are discussing recovery measures. Officials who attended the meeting said that lenders' initially step would be to issue a legal notice to the airline.
"In the past some banks, including the lead bank,State Bank of IndiaBSE 1.02 %, felt that the airline could be given a second chance since lenders have anyway waited for a year," a senior bank official said.
The company began showing signs of weakness in November 2011 when it ran out of money to operate most of its flights and started reducing its flights to cut cost. The airline, which has never made a profit, also failed to pay salaries to its employees for a long time following which the employees went on an indefinite strike. Its flying licence was finally suspended in October 2012
Lenders have declined to provide additional loan to the airline until it repays its dues and infuses fresh equity in the company. Kingfisher agreed to infuse 425 crore to restart the operations but said that this would be conditional on banks providing guarantees, which the banks have refused.
Lenders gave Kingfisher Airlines close to 7,500 crore and acquired 20% stake in the company on account of conversion of part debt into equity in 2010. However, banks have limited collateral making it imperative for them to write-off a huge portion of loan. The collateral include a Goa Villa, Kingfisher House in Mumbai and some shares of United SpiritsBSE -0.69 %.
No comments:
Post a Comment