Banks reject KFA's loan demand; SBI Caps to make revival plan

Turning down a request for Rs 200 crore working loan by Kingfisher, the SBI-led lenders consortium today asked SBI Capitals to chalk out a fresh revival plan for the cash-strapped airline in the next 2-3 weeks.

Kingfisher Chairman Vijay Mallya made a presentation in a meeting with lenders at Bangalore headquarters this afternoon, the first such meeting after the government's policy decision allowing foreign airlines to invest in domestic carriers.

According to lenders, Mallya did not offer any concrete revival plan as he could not commit on equity infusion by promoters.

An official from a public sector bank said the lenders turned down a request from Mallya for an immediate working capital loan of Rs 200 crore. Since this January, the airline has not been servicing its Rs 7,000 crore bank debt.

The official said that the lenders have asked SBI Capitals to make a new revival plan, the third one, for the airline in the next two-three weeks.

Though the company suggested a second debt restructuring, nothing was finalised, a source said.

When asked whether banks are open to a second CDR in two years, the source said that will depend on the SBI Caps proposal.

The meeting comes amidst talks of the airline talking to prospective foreign airlines to offload its stake.

At the last meeting on September 3 in Mumbai, the bankers had demanded that Mallya himself should make the revival plan and today’s meeting is the result of that.

This is the third time that SBI Caps has been asked to prepare a rejig exercise for the airline. In 2010, it had made a debt recast plan for the airline and in November that year, its Rs 6,500 crore worth loan was recast. Earlier this, SBI Caps was asked to make another revival plan.

Kingfisher shares today climbed 8.03 per cent to close at Rs 16.96 on the BSE, after touching an intra-day high of Rs 17.18 -- the highest level in a month.

Mallya also proposed his interest in replacing the already pledged Goa Villa with another property, the source said, adding but the bankers did not take a call on that.

Along with the Goa Villa, the company has pledged the Kingfisher brand worth around Rs 4,000 crore and the Kingfisher house in Mumbai with the lenders.

The meeting also comes a day after the country's largest liquor maker by volumes United Spirits, said promoter Mallya was in talks with Diageo to sell his personal stake in the company to the British liquor major.

The lenders and Kingfisher management would meet in the third week of October again.
Meanwhile, industry sources said potential investors in Kingfisher are likely to be private equity players and not airlines.

Banks together have an exposure of nearly Rs 7,000 crore in the airline and the loans have all become non-performing assets since January. SBI has an exposure of Rs 1,500 crore to Kingfisher Airlines.