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Rediff News  All News  » Business » Banks want debt repayment in KFA's Rs 650-cr revival plan

Banks want debt repayment in KFA's Rs 650-cr revival plan

Last updated on: January 14, 2013 05:05 IST

Banks want debt repayment in KFA's Rs 650-cr revival plan

Manojit Saha In Mumbai

Chairman Vijay Mallya's Rs 650-crore (Rs 6.5 billion) investment plan to revive operations of the grounded Kingfisher Airlines has piqued its lenders, as it does not include repayment of the carrier's existing bank debts.

The lenders to the airline, which has borrowed close to Rs 7,500 crore (Rs 75 billion) from a consortium of 17 banks, will meet in Mumbai on January 18 to decide on ways to recover dues.

Kingfisher had been asked to give its repayment plan in that meeting, failing which the lenders would not be shy of starting the process to sell its assets pledged with them, bankers said. "We have told them to start the repayment process. We expect some commitment from the management at the January 18 meeting," said a senior SBI official.

According to bankers, in the Rs 650-crore revival plan, there is no mention of how the debts would be repaid. There also are doubts if the investment is enough for revival, as the company's losses are estimated to be Rs 8,000 crore (Rs 80 billion).

While loans to Kingfisher have turned non-performing for most banks, a few are optimistic of being able to recover dues this month, based on the way they have structured their loan agreement separately, not as part of the consortium.

But this has not gone down well with other lenders. A senior executive with a large public sector bank says, if the carrier decides to repay loans to select lenders, the option of selling real estate of the airline and its chief would be explored to recover money.

Tags: Kingfisher , SBI , KFA , Mumbai