Management
may present a roadmap for equity fund infusion
New Delhi, June
30:
Lenders to
cash-strapped Kingfisher Airlines Ltd are likely to meet in Mumbai on July 5 to
review the airline’s financial position.
This has led to
a buzz in the market that some form of loan restructuring could be put on the
table for consideration of the bank consortium, led by State Bank of India.
Indications are
that the airline management may present a roadmap for equity fund infusion. It
may also possibly make a case for loan restructuring by the existing bank
consortium, sources close to the developments said.
This meeting
assumes significance as the beleaguered airline had recently taken steps to
reduce costs and also get its accounts upgraded with a lender who had done
pre-delivery payment (PDP) aircraft finance.
However, there
is no immediate plan on the part of the bank consortium to pump in more working
capital funds into the airline, sources indicated to Business Line.
There have been
talks of Government fast-tracking the proposal to allow foreign direct
investment in domestic airlines.
This could gain
momentum with the Prime Minister, Dr Manmohan Singh, taking charge of the
finance portfolio. The airline’s Chairman, Mr Vijay Mallya, reportedly met with
the PM shortly after he assumed charge of the portfolio.
Through an
escrow fund mechanism, banks are already having tight control over the
airline’s cash flows. For the quarter ended March 2012, many of the state-owned
banks had categorised the airline as non-performing asset and made provisions
for their exposure.
With the
private airline reportedly defaulting on lease rentals of over Rs 1,000 crore,
lessors had recently taken back 34 aircraft. However, the company maintained
that it had returned the aircraft and that the aircraft had not been taken away
by the lessors.
From 64
aircraft in November last year, the Vijay Mallya-owned airline is now left with
only 13 aircraft
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