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Rediff.com  » Business » UB in talks with Kingfisher lenders to cut debt

UB in talks with Kingfisher lenders to cut debt

Last updated on: February 15, 2013 17:26 IST

With banks planning to monetise Kingfisher Airlines' securities to recover a debt of about Rs 7,000 crore (Rs 70 billion), the grounded carrier on Friday said it was continuing discussions with its lenders and had not received any formal communication from them on the matter.

"We have received no formal communication from the banks till date. We are in continuing discussions with them on ways to bring down their exposure, inter alia, from the proceeds of the Diageo transaction," a Kingfisher spokesperson said in a statement.

"The banks explicitly support the transaction with Diageo and would work with us in finding an orderly method of disposal of some of the pledged shares to Diageo if appropriate," he said.

The statement came a day after Kingfisher lenders expressed hope of recovering up to Rs 1,000 crore (Rs 10 billion) of their dues by monetising the securities in the March quarter itself.

"That (selling the securities given as collaterals) is the plan," Shyamal Acharya, SBI Deputy Managing Director (Mid-Corporates Accounts), said in Mumbai yesterday.

The consortium of 17 banks, led by SBI, has an outstanding of over Rs 7,000 crore (Rs 70 billion) from the airline. It has shares of listed entities like United Spirits as collaterals which should realise Rs 500 crore (Rs 5 billion), apart from the brand Kingfisher as a security.

Additionally, the consortium has residual rights over the securities held by Srei Infrastructure Finance, which comes to Rs 500 crore. Srei bought this from ICICI Bank in April last year.

"These are low-hanging fruits which should give us Rs 1,000 crore. Balance is corporate guarantees, personal guarantees and properties," Acharya said, adding the total collaterals held by the banks were worth about Rs 6,500 crore (Rs 65 billion).

SBI has the maximum exposure, over Rs 1,600 crore (Rs 16 billion), in the Vijay Mallya-led airline, followed by PNB with Rs 800 crore, IDBI at Rs 800 crore, Bank of India at Rs 650 crore and Bank of Baroda has Rs 550 crore.

Other banks include United Bank of India, which has an exposure of Rs 430 crore, Central Bank of India (Rs 410 crore), UCO Bank (Rs 320 crore), Corporation Bank (Rs 310 crore), State Bank of Mysore, (Rs 150 crore), Indian Overseas Bank (Rs 140 crore), Federal Bank (Rs 90 crore), Punjab & Sind Bank (Rs 60 crore) and Axis Bank (Rs 50 crore).

Lenders outside the consortium are Srei Infrastructure (Rs 430 crore), Jammu & Kashmir Bank (Rs 80 crore) and Oriental Bank of Commerce (Rs 50 crore).

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