Lenders kick off Kingfisher asset sale process

Initiates steps to recover Rs 120 crore from sale of Mumbai,Goa properties

Lenders have initiated steps to recover about Rs 120 crore from the sale of two properties in Mumbai and Goa belonging to beleaguered Kingfisher Airlines which has defaulted on loans.

Banks which had a meeting with the airline officials here on Thursday also asked the airline to submit a report on the steps taken to improve its operations and the challenges faced by the company in the next two weeks.

The two properties on the block included the Kingfisher House in suburban Andheri which has a market value of Rs 90 crore and a villa in Goa which is valued at around Rs 30 crore. Kingfisher which denied recovery proceedings by its lenders,said it had already proposed sale of these properties to bankers a few months ago.

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The Kingfisher House in Mumbai has been lying vacant after the staff moved to our new offices at The Qube in Mumbai,and at that time itself,on our own accord,we approached the banks with a proposal to liquidate this unutilised asset and at todays meeting we raised the issue of this pending approval, the airline spokesperson said in a statement. The airline said Thursdays meeting was a pre-scheduled one to update the lenders and that there was no discussion on commencement of recovery proceedings.

The airline has a debt of Rs 7,500 crore from 17 lenders. State Bank of India alone has an exposure of over Rs 1,400 crore,followed by Punjab National Bank (Rs 700 crore),Bank of Baroda (around Rs 500 crore) and private lender ICICI Bank (Rs 430 crore),which had earlier this week sold its debt to a hedge fund run by Srei Infra. At the lenders meeting,banks gave a 15-day notice to the airline management to come up with concrete steps to improve operations,said a banking source. Its not going to be easy to recover the loans from the company which has made huge losses and eroded the net worth, he said.

Though Kingfisher was seeking more bank loans,banks are reluctant to extend more funds.

Banks have already made provisioning for loans defaulted by KFA. How can we extend more loans? Its networth has been eroded. In Air Indias case,the approval for restructuring by the banks came after a Group of Ministers okayed sovereign guarantees for Rs 7,400 crore non-convertible debentures, said a banking source.