It's disappointment once again for lenders from Mallya

It was disappointment once again for SBI-led consortium of lenders who have a total exposure of around Rs 7,000 crore towards Kingfisher Airlines, the losses-ridden airline owned by Vijay Mallya. After a series of AGMs of UB Group companies over the past three days in Bangalore, Vijay Mallya finally attended the lenders meet at his UB Group corporate head office, but it is understood that there was no concrete plan about how he will pump in equity into his airline, which is reeling under a debt of close to Rs 9,000 crore on a negative net worth.  The presence of Vijay Mallya was precipitated after recently the top brass of SBI urged Mallya to be personally present at the meeting to spell out a concrete plan.

According to information available, Mallya once again requested the lenders for an additional Rs 200 crore of working capital, an aspect to which the lenders did not buy in to. The management of Kingfisher Airlines have been making this request during the past year, but the lenders are holding steady but offering no leeway. The lenders, whose exposure is already being treated as NPAs, have been saying that it is high time, Mallya infused equity before which they will consider extending working capital. Mallya had during the AGM of Kingfisher Airlines on Wednesday told that the promoters have infused a massive Rs 1,154 crore into Kingfisher Airlines, but had refused to comment on how the money was put to effective use by Kingfisher Airlines.

The meeting which went on for as much as two hours on Thursday, also saw the appointment of SBI Caps yet again to work out a restructuring package. It is understood that there will be another lenders meet during third week of October 2012, to take up further steps. However, there was no official statement from either the lenders or from the management of UB Group.  It is understood further that Mallya told the lenders that he is talking to strategic global airlines as well as private equity investors for investment into Kingfisher Airlines, the aspect of which has been going on yet again for the past year.

To address the aspect of infusing equity into Kingfisher Airlines, Mallya is mulling over a proposal to offload a part of his stake in his other group company – United Spirits, and channel a part of the proceeds into Kingfisher Airlines.