State Bank of India, which leads the consortium of lenders for Kingfisher Airlines [ Images ], on Friday described the Vijay Mallya [ Images ] promoted UB Group's decision to sell majority stake to Diageo for over Rs 11,166 crore (Rs 111.66 billion) as a positive development.
It said a meeting would be held with the airline's management soon.
The deal may provide Mallya a breather from troubles emanating from his grounded Kingfisher Airlines.
"This is obviously positive news for us. We do think money flowing into the hands of the main holding company and the promoter is a positive for the airline," SBI [ Get Quote ] managing director, mid-corporates, S Vishwanathan told reporters while announcing the second quarter earnings of the bank in Mumbai [ Images ].
"A meeting would be held between the lenders and the airline management after Diwali [ Images ] now that this deal is through," he said.
Earlier today (on Friday), the world's largest spirits maker Diageo said it has agreed to buy 53.4 per cent stake in United Spirits [ Get Quote ] Group for Rs 11,166.5 crore, but will allow UB group promoter Mallya to continue as the chairman.
With an outstanding of over Rs 1,500 crore (Rs 15 billion), which has become bad loans since January, SBI has the largest exposure to the airline, which has been grounded since October 1 following an employee strike and subsequent cancellation of licence on October 20.
Kingfisher has a debt pile of over Rs 7,000 crore (Rs 70 billion).
Stating that the bank had already fully provided for the bad loan to the airline, SBI chairman Pratip Chaudhuri said, "From the perspective of money coming to the promoters and the holding company, it augurs well for the airline."
"There can only be an upside for the airline from here on. Kingfisher needs capital and where the money comes from, we are completely agnostic," he said.
The airline yesterday (on Thursday) reported widening of losses in the second quarter of 2013 at Rs 754 crore (Rs 7.54 billion).