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Lenders ask Kingfisher to infuse Rs 800 cr fresh equity

The bankers have made it clear that the promoters have to put in at least Rs 800 crore worth of fresh equity as the lenders cannot act as promoters of the airline. Cash-strapped Kingfisher Airlines' board will meet again on Tuesday to chalk out a rescue plan for the carrier.

BT Online Bureau   New Delhi     Last Updated: December 2, 2011  | 16:09 IST

Bankers to the cash-strapped Kingfisher Airlines on Monday asked its promoters to infuse Rs 800 crore worth of fresh equity if they are to consider a second restructuring of existing debt, as opposition mounted to any bailout of the private carrier.

The bankers have asked the troubled airline to come out with a "credible" plan. Cash-strapped Kingfisher Airlines' board will meet again on Tuesday, after their Monday meet was inconclusive in chalking out a rescue plan for the carrier as it continued to cancel many of its daily flights while struggling with a pilot exodus and huge debts.

"The board meeting which was held today was inconclusive," a company official said on the meet which was held to discuss the July-September quarter performance and on the issue of infusing fresh capital in the company.

According to the official, the board will meet again Tuesday after the carrier's chief executive and chief financial officers meet with the company's lenders.

Senior company officials will also address the media Tuesday to announce the company's second quarter results.

The board meeting came in the backdrop of increasing anxieties about the financial health of the airline. The country's stock markets, vendors and lenders would also be keeping a close watch on the company's quarterly results.

The lenders - a 13-bank consortium led by SBI, who were yet to decide on ways to soften the troubled airline's Rs 7,057.08 crore debt burden - are due to meet Kingfisher management on Tuesday.

The bankers have made it clear that the promoters have to put in at least Rs 800 crore worth of fresh equity as the lenders cannot act as promoters of the airline.

"Bankers want more information on their fleet, equity, continuation of fuel supply. Banks can come in as lenders not promoter. We will respond how it unfolds," said Pratip Chaudhuri, Chairman of SBI which leads the 13-bank consortium that has financed Kingfisher.

On whether the bank will consider making fresh advances to Kingfisher, SBI Managing Director Hemant Contractor said, "We have to be satisfied about the viability of the company. There is no point restructuring if the company's operations are not going to be viable.

"We have asked them to come up with some fresh funds if the banks are to at all consider their request for restructuring. We want to see more funds coming from the company itself..."

SBI has the largest exposure to Kingfisher - Rs 1,400 crore - among the lenders.

Amid the debate over bailout for Kingfisher, SpiceJet chief Neil Mills said the government should not use taxpayers' money to revive a private sector company.

Mallya on his part said he is not seeking taxpayers money. "No bail out involving tax payers money. V want working capital management assistance." he said in his latest tweet.

The debt-ridden airline continued with flight cancellations for the eighth straight day. The airline did not operate at least 40 flights today. .

Besides SBI, the consortium includes ICICI Bank, IDBI Bank, Punjab National Bank, Bank of Baroda, Bank of India, UCO Bank, Oriental Bank of Commerce and State Bank of Mysore.

Together, these banks now hold a 23.4 per cent stake in the airlines and have an exposure of over Rs 7,700 crore.

The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7057.08 crore. According to industry estimates, Kingfisher is losing about Rs 3-4 crore a day due to the flight cancellations.

The lessors, who arrange aircraft on long-term leases for companies, have been negotiating with Kingfisher for the past few days reportedly after the airline delayed payments on some aircraft.

(With Agency Inputs)

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