More pressure on KFA

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Lenders have asked for at least Rs 800 cr before embarking on a restructuring plan

Lenders to Kingfisher Airlines have sternly asked the company to bring in equity of atleast Rs 800 to Rs 1000 crore before bankers embark on a restructuring plan. The airline has an outstanding dues of Rs 1600 crore over and above the limit set aside for the airline. Banks individually had set initial limits but over a period of time the airline has either borrowed or banks have guaranteed its letter of credit with the limit for all banks exceeding by Rs 1600 crore. Bankers now want at least half of this amount to be returned to the banks.

“We have asked the airline to first put some equity on the table before we can start guaranteeing any more letter of credit or the restructuring process. The airline needs about Rs 625 crore to restart its operations but it does not cover any of the banker’s dues so we have asked the company to come back with some concrete plans for infusing equity into the company,” said a senior banker is involved with the deliberations with the company.

The lenders meet with the company was held in Mumbai when the core group of lenders and top officials from Kingfisher Airlines, CEO Sanjay Aggarwal and its CFO Ravi Nedungadi attended. The shares of the company closed 0.28 per cent higher at Rs 14.21 after news of the lenders meet spread with expectation of banks’ backing the airline on its path of revival.

Bankers in the last meeting held on December 17, 2012 had formed a core group with six banks with State bank of India has the lead to chalk out a repayment schedule from the airline. The banks have accumulated a debt of Rs 7,400 crore and own about 24 per cent stake in the airline. SBI caps has been appointed to work on the repayment schedule and a restructuring plan to revive the airline.

The airline has temporarily shut down its operations when on October 20, 2012 the DGCA suspended its flying license. This suspension had been due to failure to give an effective response to the show-cause notice issued by DGCA, which had asked for an explanation on its safety and operational handicaps that led to the airline cancelling many flights.

Kingfisher Airlines had shut down its operations from October after DGCA cancelled its license for cancellation of flights and other operational handicaps.

SBI has an exposure of Rs 1,200 crore to Kingfisher Airlines, IDBI Bank has Rs 727 crore, Bank of India has a loan of Rs 575 crore, Bank of Baroda has an exposure of Rs 537 crore. The lenders consortium has 17 banks with a total exposure of Rs 7,400 crore in loans, the debt which the company failed to service from last year forcing banks to classify it as a non-performing asset. Private sector lender ICICI bank sold off its Rs 450 crore debt to the airline to Srei Infrastructure Finance in July earlier this year.

According to its 2011-12 annual report, the Kingfisher Airlines’s net loss more than doubled to Rs 2,328 crore in 2011-12 from Rs 1,027 crore in the previous year. Its total long-term borrowing stood at Rs 5,695 crore as on March 31, 2012 while its short-term borrowings rose to Rs 2,335 crore at the end of 2011-12.

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