Lenders may sell Kingfisher properties

Lenders appoint HDFC Securities to value 2 Kingfisher properties.

Written by Agencies | New Delhi | Published: July 5, 2012 7:44:23 pm

Lenders to Kingfisher Airlines have appointed HDFC Securities to do a valuation of two pledged properties of the crippled carrier as part of their plan to partially recover Rs 7,500 crore loan.

“We have asked HDFC Securities to do a valuation of the two properties– the Kingfisher House in Mumbai and a villa in Goa– which are already pledged with the lenders. We have asked them to revert in 15 days,” a senior banker,who was present in a meeting with the airline management this morning,said.

These properties are likely to fetch Rs 120 crore– Rs 90 for the Mumbai property and Rs 30 crore for the Goan villa– going by the current market value,said some bankers.

The Bangalore-based carrier owes banks Rs 7,500 crore in arrears and additional interest since January when it stopped servicing these loans.

As the meeting,attended by most of the 17 lenders and airline’s chief executive Sanjay Aggarwal,was inconclusive,the lenders also decided to meet again over the next 2-3 weeks,the banker added.

The meeting was held at the headquarters of the State Bank of India which is the leader of consortium of 17 lenders.

The airline,however,denied any talk of recovery proceedings by lenders,saying it had already proposed sale of the idle Kingfisher House and a villa in Goa to bankers a few months ago.

“The Kingfisher House 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 today’s meeting we raised the issue of this pending approval,” the airline spokesperson said in a statement.

The airline further claimed that today’s meeting was a pre-scheduled one to update the lenders and that “there was no discussion on commencement of recovery proceedings”.

The meeting failed to make any headway as the company failed to commit on fresh fund infusion by promoters,bankers said earlier,The company was also asked “to come up with a credible revival plan”,they added.

The revival plan is being prepared by SBI Caps.

The lenders have been demanding at least Rs 1,000 crore in fresh capital by promoters as a pre-condition for considering the airline’s request for working capital loan of around Rs 2,000 crore. This was a pre-condition that lenders insisted at the previous meeting in March.

Along with personal guarantee of the airline Chairman Vijay Mallya,and other guarantees and pledges like the brand Kingfisher,these two properties are already pledged with the lenders following the November 2010 debt recast when its debt of Rs 7,000 crore was recast under an RBI approved plan.

The restructuring also involved the airline issuing 23.4 per cent worth of its equity in convertible preferential debentures to lenders,who in April 2011 had converted them into to equity at a price of Rs 64.48 per share which today closed only at Rs 11.94 a share.

Kingfisher was launched in May,2005 but has not made any profit so far. It has a total outstanding debt of Rs 7,500 crore and an equal amount in accumulated loss.

Out of the total loans,State Bank alone has an exposure of over Rs 1,400 crore,followed by PNB (Rs 700 crore),Bank of Baroda (around Rs 500 crore). Private lender ICICI Bank,which had Rs 430 crore exposure,had earlier this week sold its debt to a hedge fund run by Srei Infra.

The carrier has not been paying salaries to employees for the past five months. It also defauled on tax payments.

Kingfisher has only 15 aircraft flying,including eight ATRs,while 15 of its aircraft are grounded.

Its lessors recently took back as many as 34 aircraft after the company allegedly defaulted on rentals amounting to around Rs 1,000 crore.

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