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Rediff.com  » Business » Banks reject Kingfisher Airlines' loan demand

Banks reject Kingfisher Airlines' loan demand

September 27, 2012 20:49 IST
Turning down a request for Rs 200 crore (Rs 2 billion) working loan by Kingfisher, the SBI-led lenders consortium on Thursday 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 on Thursday 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.

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