NEW DELHI: State-run
banks are likely to give grounded Kingfisher AirlinesBSE -4.91 % another two months before
liquidating the pledged securities, giving the airline one last chance to come
back from the brink, said people familiar with the development.
The move is backed by the finance ministry, which is opposed to the idea of restructuring loans till the airline's promoter Vijay Mallya brings in a new investor or pumps in more money from the group company, United Breweries HoldingsBSE -4.63 %. Last week, country's largest bank State Bank of India's chairman Pratip Chaudhuri had said that if they (banks) pull the plug now, all possible investors will walk away.
"Having waited so long, we might as well wait a little longer," he had said. Chaudhuri had also ruled out any further lending to Kingfisher Airlines as the company does not have any asset to hypothecate and there's no room for fresh debt. "Within two months, they need to bring someone to the table. Even if the money is not infused, decision on the broad contours such as managerial issues need to be taken," said another banker privy to the discussions. Yet another banker, who is part of the lenders' committee, told ET that the airline has assured bankers that with the government allowing 51% foreign direct investment ( FDI) in aviation, there has been a renewed interest from investors.
"We have been told that they are in advanced talks with some Middle-East based airline. And they (Kingfisher) will be able to sign some sort of agreement in the next one month or so," he said, requesting anonymity.
Chairman of a state-run bank even confirmed that Kingfisher had told them that discussions were going on.
"There were issues with valuations but now the urgency is there. We expect them to induct a partner, and come out with broad contours at the earliest," he said. A finance ministry official said that the government is not in favour of banks restructuring the airline's account. "The call to go for enforcement of securities lies with banks. As far as restructuring is concerned, it does not make any economic sense," he added.
Kingfisher Airlines has an outstanding exposure of around Rs 7,000 crore towards 11 state-run banks. SBI, the leader of the consortium, has an exposure of Rs 1,458 crore followed by IDBI BankBSE -0.64 % ( Rs 728 crore), PNB ( Rs 710 crore), Bank of India ( Rs 575 crore) and Bank of BarodaBSE -1.35 % ( Rs 537) towards the airlines.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/banks-likely-to-give-kingfisher-airlines-two-months-to-salvage-itself/articleshow/16717065.cmsThe move is backed by the finance ministry, which is opposed to the idea of restructuring loans till the airline's promoter Vijay Mallya brings in a new investor or pumps in more money from the group company, United Breweries HoldingsBSE -4.63 %. Last week, country's largest bank State Bank of India's chairman Pratip Chaudhuri had said that if they (banks) pull the plug now, all possible investors will walk away.
"Having waited so long, we might as well wait a little longer," he had said. Chaudhuri had also ruled out any further lending to Kingfisher Airlines as the company does not have any asset to hypothecate and there's no room for fresh debt. "Within two months, they need to bring someone to the table. Even if the money is not infused, decision on the broad contours such as managerial issues need to be taken," said another banker privy to the discussions. Yet another banker, who is part of the lenders' committee, told ET that the airline has assured bankers that with the government allowing 51% foreign direct investment ( FDI) in aviation, there has been a renewed interest from investors.
"We have been told that they are in advanced talks with some Middle-East based airline. And they (Kingfisher) will be able to sign some sort of agreement in the next one month or so," he said, requesting anonymity.
Chairman of a state-run bank even confirmed that Kingfisher had told them that discussions were going on.
"There were issues with valuations but now the urgency is there. We expect them to induct a partner, and come out with broad contours at the earliest," he said. A finance ministry official said that the government is not in favour of banks restructuring the airline's account. "The call to go for enforcement of securities lies with banks. As far as restructuring is concerned, it does not make any economic sense," he added.
Kingfisher Airlines has an outstanding exposure of around Rs 7,000 crore towards 11 state-run banks. SBI, the leader of the consortium, has an exposure of Rs 1,458 crore followed by IDBI BankBSE -0.64 % ( Rs 728 crore), PNB ( Rs 710 crore), Bank of India ( Rs 575 crore) and Bank of BarodaBSE -1.35 % ( Rs 537) towards the airlines.
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