MUMBAI: Kingfisher lenders today expressed the
hope that the company management will not let the airline go belly up and said
banks would be a bigger casualty if
it goes bust.
"We (the lenders) are for seeing the
airline turn around and not getting grounded. We hope the promoters won't let
the present crisis get more complicated. After all, we don't think chairman Vijay Mallya will
let his image be tarnished by letting the airline go belly up," a senior
official of a public sector bank told
PTI here this evening.
The
banker said: "None of us wants the airline to go bust. If that happens,
banks will be a bigger casualty than the airline."
When asked about
whether banks are looking at recovery measures by monetising the collaterals,
the banker said by doing that the lenders won't be able to recover not even 10
per cent of their outstanding to the airline.
The Vijay Mallya-owned airline and its promoters have
most of their shares and assets pledged with banks, including the brand
Kingfisher (pledged for a value of Rs 4,100 crore) and two of its
properties--the Kingfisher Villa in
Goa and the Kingfisher House in Mumbai, together valued at around Rs 200 crore.
"We hope the talks that Mallya is holding for stake
sale in his other concerns like United Spirits (with UK'sDiageo) will fructify soon. If that happens Mallya
could recapitalise the airline and then we bankers can look at recasting his
existing loan or even fund fresh working capital requirements," the banker said.
When asked about the amount that banks are looking at as
fresh capital infusion by the airline for a fresh lifeline, he said normally a
CDR involves the promoters bringing in at least 25-30 per cent of the overall CDR package in
fresh equity. At 25 per cent, this works out to be around Rs
1,750 crore as the airline's outstanding principal alone is over Rs 7,000
crore.
ICICI Bank had
an exposure of Rs 400 crore to Kingfisher in June, but sold out loan.
That apart, the
lenders together hold around 23 per cent in the airline since March, after the
banks converted their Rs 6,500 crore of recast debt (after the November 2010
CDR) into equity.
These banks picked
these stakes at a hefty premium- when the share was trading at Rs 38, the banks
converted these shares at Rs 64.48 per share. Its shares closed at Rs 14.60
today, down 5 per cent. It had touched a low of Rs 7.01 in August.
A senior official at the State Bank, which has an
exposure of Rs 1,580 crore and unpaid interest from January, said if the crisis
deepens, the consortium of lenders together will decide what course of action
should be taken.
"Though
we are the lead the 17-bank consortium of lenders to Kingfisher, we cannot take
a unilateral decision. We will have to get the rest of the lenders on board for
any concrete action," the SBI official
told PTI.
When asked whether the
lenders are looking at beginning recovery process, the official said the banks
will ensure that they will use every means to protect their interest.
The crisis at
Kingfisher worsened today as reconciliation talks between the management and
the striking engineers and pilots over payment of seven months salary dues
failed with the protestors rejecting the offer of part-payment and vowing to
continue their agitation.
With no end to the
deadlock, a question mark hung over the airline's plans to resume operations
from Friday, after a four-day partial lockout and complete suspension of all
operations since Monday night.
Kingfisher has been saddled
with a huge loss of over Rs 8,000 crore and a debt burden of over Rs 7,000
crore.
After declaring a partial
lockout till October 4 following the strike by engineers and pilots over
non-payment of salary, the airline CEO Agarwal had expressed confidence about
resolving the situation in the next few days. "We will take a call on
October 4 on resumption of our operations."
The airline would be using
its current fleet of ten aircraft -- seven Airbus A-320s and three turbo-prop ATRs,
to resume flights. With these planes, Kingfisher has been operating about 70-80
flights each day till it suspended all operations on Monday night.
Over 80 pilots and 270
Kingfisher engineers have been on intermittent strikes over the past few
months, primarily over delay in payment of salaries.
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