Uncertainty over funding for Kingfisher Airlines

The cash-strapped airline is understood to have been told by the bankers that it should get at least 25% of the Rs3,000 crore loan it is looking for in the form of fresh equity. However, sources said that chairman of the Group Vijay Mallya is not in a position to give any commitment and the bankers will take the next step only on such an assurance

New Delhi: With Kingfisher Airlines facing huge turbulence, there is still uncertainty over moves by a consortium of bankers to offer fresh loan for the beleaguered carrier, which came out with a curtailed flight schedule on Wednesday, reports PTI.

Notwithstanding reports that the lead banker of the consortium State Bank of India (SBI) has agreed to provide Kingfisher a Rs1,650 crore ($336 million) relief package, the bankers were tight lipped about what they were planning.

However, sources in the consortium said that Kingfisher could look for any fresh loans only if the main promoter United Breweries gets an infusion of fresh equity.

The air carrier is understood to have been told by the bankers that it should get at least 25% of the Rs3,000 crore loan it is looking for in the form of fresh equity.

The sources said that chairman of the Group Vijay Mallya is not in a position to give any commitment and the bankers will take the next step only on such an assurance.

SBI chairman Pratip Chaudhuri declined to comment on the issue saying client confidentiality prevents him from talking about a particular company.

However, civil aviation minister Ajit Singh said if banks can loan them money “it is all good”.

“It is between the company and the banks,” he told reporters.

Finance minister Pranab Mukherjee declined to comment on reports of SBI coming out with a bailout saying “as and when events take place you will come to know.”

The airline has a debt of Rs7,057 crore ($1.5 billion) with SBI’s exposure alone placed at Rs1,500 crore.

On reports that it is considering bailout for Kingfisher, SBI shares plunged by 8% in the stock market on Wednesday.

In some interesting comments Reserve Bank of India (RBI) deputy governor KC Chakrabarty said the central bank is not opposed to SBI extending support to the airline if it is a professional decision.

“Banks are commercial entities. If they feel that by supporting a unit, the unit can survive, they must explore that possibility”, he said, adding “banks are risk-taking entities”.

News reports quoted a senior SBI official denying that the bank had given fresh loans to the airline.

Ajit Singh said the government was not for closing down of any airline.

“Closure of any airline will not help either the industry or the passengers. Action against the company does not mean closing down the airline”, he said.

But the civil aviation ministry was firm that the safety of passengers would be upper most even when it insists that the airline should continue its operations say, for instance, in north eastern routes.

Meanwhile, in compliance with the directions by the Directorate General of Civil Aviation (DGCA), Kingfisher Airlines, whose services remained affected for the sixth day, yesterday filed a fresh flight schedule with the regulator scaling down its operations to about 170 daily flights with 28 functional aircraft.

The airline submitted a revised winter schedule of flights it would operate till March. This schedule is being examined, DGCA sources said.

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COMMENTS

xanadu

5 years ago

How can bankers give loans so easily to KFA?
KFA is a willful defaulter.The management's credentials are suspect.In plain words they are frauds.
It has willfully not remitted TDS and service tax to the government, which belongs to the government the moment it was collected/deducted at source.For usurping government money, there should be imprisonment.Why not send the great Dr VIjay Mallya to the prison when other small industrialists have been sent to jail for much lesser offences.

Why can't Dr Vijay Mallya, king of good times,playboy,flamboyant etc etc, bring in his personal wealth from liquor business to help Kingfisher.Also offer his yachts,racehorses,jazzy cars,mansions as colatteral for the loans that he wants from the banks to pay salaries and remit tax that he had eaten/swallowed earlier unlawfully.

How can some banks where they are having KFA as performing asset, think of extending further loans on that basis.There should be a consortium approach.If Mallya is having cancer and he is sick, he is sick everywhere and not selectively.He can't be healthy someplace and sick at other places.RIDICULOUS.

Don't extend any further loans unless it is fully secured by his personal wealth from other businesses.Let him sell off his luxury toys first and live an austere life and not squander public money.

What about his son Siddharth.Does he do anything worthwhile apart from being seen with Deepika for promoting himself.Why pay him any salary and perks when father and son have brought thousands of employees to the streets by not paying their meager salaries.

CCI approves Sasan Power Infra, Reliance Power merger

‘The control over the activities carried on by SPIL and RPL before and after the proposed combination remains with the management of RPL:’ CCI

Competition watchdog CCI has approved the merger of Sasan Power Infrastructure with its parent firm Reliance Power, which is promoted by billionaire Anil Ambani.

The Competition Commission of India (CCI), in an order, said, "Based on the facts on record and the details provided in the notice filed under sub-section (2) of Section 6, the proposed combination is not likely to give rise to any adverse competition concern ... The Commission hereby approves the proposed combination."

CCI further noted that Sasan Power Infrastructure (SPIL) and Reliance Power (RPL) are not engaged in production, supply, distribution, storage, sale or trade of identical or similar goods or provision of services.

"The activities of SPIL and RPL are also not related at different stages of levels of production chain different markets," it said, adding, "Further, the control over the activities carried on by SPIL and RPL before and after the proposed combination remains with the management of RPL".

In the early afternoon, Reliance Power was trading at around Rs120.05 per share on the Bombay Stock Exchange, 2% down from the previous close.

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Reliance Brands forms joint venture with Iconix

The new venture will be based in Mumbai and the existing brands of Iconix, Ed Hardy and Mossimo will also be rolled out into the partnership, the companies said in a statement.

Mukesh Ambani-led Reliance Brands, a subsidiary of the group’s retail venture Reliance Retail, has announced the formation of a joint venture with the US-based Iconix Brand to hawk the latter’s brands including London Fog and Ocean Pacific.
 
The new venture will be based in Mumbai and the existing brands of Iconix, Ed Hardy and Mossimo will also be rolled out into the partnership, the companies said in a statement.

The Nasdaq-listed Iconix had signed a licence agreement last year with Arvind Lifestyle’s Megamart for selling its youth brand Mossimo in the country.

“Partnering with Reliance is an essential next step in our global expansion strategy,” Iconix Brand chairman and chief executive, Mr Neil Cole, said.

“With this new partnership, and together with our existing global partnerships, we are on our way to achieving our long-term goal of growing international revenue to a third of our total business,” Mr Cole further said.

Iconix has other similar partnerships in China, Europe and Latin America.

“Having the ability to leverage the global strength of the Iconix portfolio, and building a larger presence for them here, is an incredible proposition. This fits very well into Reliance Brands’ vision of creating long-term value through multiple models of partnerships in the fashion and retail business,” Reliance Brands chief executive, Mr Darshan Mehta, said.

Reliance Brands currently has brand partnerships for Diesel, Ermenegildo Zegna, Hamley’s, Kenneth Cole, Paul & Shark, Quiksilver, Roxy, Steve Madden and Timberland.

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