HDFC to value non-core assets of Kingfisher Airlines

Mortgage lender HDFC will find a buyer for the debt-laden Kingfisher Airlines’ non-core assets — Kingfisher House in Mumbai and the promoters’ villa in Goa.

The consortium of 17 banks has agreed to Kingfisher Airlines roping in HDFC to do the valuation of these two properties and also find a buyer, sources in the banking industry said. Kingfisher Airlines is looking to liquidate non-core assets as part of its efforts to repay the debt raised from banks.

As the banks collectively hold the rights to the two properties, they have a say in their disposal, it was pointed out. HDFC does not have any debt exposure to Kingfisher Airlines.

But selling the two properties will only lighten the debt burden for the private carrier, which owes about Rs 6,500 crore to the consortium of 17 banks. This is because the sale proceeds, as and when realised, will be a fraction of the outstandings.

There is still no clarity as to how the banks will split among themselves the proceeds from the sale of these two properties.

The valuation report on the two properties will be submitted to the bank consortium, led by the State Bank of India. Thereafter, the banks are likely to take a call. Representatives of the private carrier met all the 17 lenders in Mumbai on July 5. Kingfisher Airlines described this meeting as an “update meeting” and not one for discussions leading to commencement of recovery proceedings.

At the meeting, banks wanted Kingfisher Airlines to come up with a concrete action plan, within a fortnight, to revive its operations. From 64 aircraft in November last, the airline’s fleet strength is down to 13.

Kingfisher House has been lying vacant after the airline staff moved to new offices at the Qube in Mumbai. The private airline may get Rs 90-100 crore by selling this building.

Of the bank loans of Rs 6,500 crore as at end March 2012, State Bank of India alone has an exposure of Rs 1,400 crore, followed by Punjab National Bank (Rs 700 crore), Bank of Baroda (Rs 500 crore) and ICICI Bank (Rs 450 crore).

ICICI Bank recently offloaded its debt exposure in the airline to a fund managed by SREI Infrastructure Finance.

Kingfisher had pledged assets ranging from its brand to office furniture for the Rs 6,500-crore bank loans, according to the Finance Ministry.

The assets pledged include a luxury villa in Goa, two helicopters, a building in Mumbai. Shares have also been used as collateral for loans as of November 2011, Mr Namo Narain Meena, Minister of State for Finance, had told Parliament last December.

Lenders are understood to have also asked for a revaluation of the Kingfisher brand, which was pledged with them in 2010.

Kingfisher Airlines has not made any profit since its launch in May 2005. The aircraft lessors too recently took back the planes after the airline reportedly defaulted on lease rentals.

> krsrivats@thehindu.co.in

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