The Hindu Business Line : UB Group to raise $400 m to acquire aircraft, retire debts

Mr Mukesh Ambani, Chairman, Reliance Industries, with Mr Vijay Mallya, Chairman, UB Group, at the India Economic Summit 2005 in the Capital on Tuesday. — Kamal Narang

New Delhi , Nov. 29

THE UB Group plans to raise over $400 million during 2006 to fund its airline's aircraft acquisition plan and retire debt in United Spirits, the Chairman and Managing Director, Mr Vijay Mallya, said here on Tuesday.

While about $200 million will be raised by Kingfisher Airline through an Initial Public Offer (IPO), United Spirits plans to raise another $200 million from private equity investors.

"The airline's initial fund requirement is for about $200 million. We are restricting it to that level during the first phase," Mr Mallya told newspersons on the sidelines of the World Economic Forum. The airline is floated by the UB Group.

The proceeds of the IPO, which is expected during 2006, will be used to fund the airline's fleet expansion plans. At the recently-concluded Dubai Airshow, the airline announced it would be purchasing 50 aircraft including 20 ATR aircraft and 30 Airbus A-320 aircraft. The value of the order is about $2 billion.

Asked on the status of the offer the airline had made to pick up a stake in Air Sahara, Mr Mallya said that they had received several queries from the advisors, Ernst & Young. "The queries received were all very normal when one is going in for a merger or acquisition. They wanted to know what we meant, what was included and what was not and things like that," he said.

Without divulging details of the offer made to Air Sahara, Mr Mallya said, "At the price I have quoted it is a value-for-money deal. However, whether it is the same at the price valued by Ernst & Young is debatable."

Meanwhile, the airline will not reduce fares despite the cost of aviation turbine fuel (ATF) coming down from December 1 this year.

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