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In a last ditch effort to rescue Kingfisher Airlines, liquor distributors belonging to the UB group are expected to pitch in with slightly over Rs 1,000 crore.
This partially fulfils the condition of the consortium of banks that had said that if the airline promoters bring in additional funds, then the banks would also make funds available to Kingfisher.
An announcement about the investment is likely in the next 24-48 hours. Sources privy to the development claimed that hectic negotiations are still on going to get the funds.
In case the funds come in, they will come as “associate” of the UB Group. The funds could either come in as debt or be used to pick up equity.
Besides, with some of its bank accounts being ‘de-frozen', Kingfisher Airlines will also be able to clear some of its income and service tax dues.
Bankers belonging to the lending consortium told Business Line that the airline would make partial payments to the tax departments in a day or two.
“The company would be making the balance payment in the coming days,” a banker said.
According to him, Kingfisher Airlines could also manage to “standardise its account if it manages to make the total critical arrears payment of Rs 882 crore” by March 31, 2012.
Though the critical amount “was supposed to have been brought in by February, the account will become standard for all banks if the company manages to pay the critical arrears amount by March 31,” he said.
The banking consortium has a total exposure of over Rs 7,000 crore, of which Rs 4,000 crore is in the form of term loans.
Another banker said that it was not clear how the airline would make these payments, as they are yet to infuse fresh equity and also reduce the debt component.
“Depending on bank debts alone would not help them tide over their current problems,” he said.
The company is yet to come up with a viable business plan, added the banker.
In case the company fails to make the critical payment, then banks would have to provide for the non-performing asset.
Besides a villa, the company's corporate office, two helicopters and ATR aircraft, the biggest hypothecation from the airline was its Kingfisher brand, which was valued at Rs 4,000 crore. “The brand value is not as high now,” said the banker.
Shares dip
On Monday, the airline stock dipped to a new low on the Bombay Stock Exchange.
It closed at Rs 16.75, a decline of 6.69 per cent from the previous closing.
Meanwhile, the airline clarified that following the recent decline in its share prices, ICICI Bank, as a matter of routine, “requested” that “security be topped up” or “loan amount be adjusted suitably.”
“There is absolutely no recall of the entire loan facility nor any notice for sale of securities,” the airline clarified.
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