KFA likely to speed up debt restructuring

The debt-ridden Kingfisher Airlines, owned by UB Group, is expected to speed up the debt restructuring process in the wake of increased pressure from various lenders. The company is under a debt of close to Rs 7,000 crore on a leverage of close to 20 times.

Industry sources indicate that various financial institutions are in active discussion with the company and its mandated banker - SBI Caps, to restructure loans which is due during this quarter.

Kingfisher Airlines during the past week appointed SBI Caps to align with various lenders and hammer out a debt restructuring process ahead of a $250-300 million fund raising plans. A senior UB Group official said that various active discussions are on with lenders and things are being sorted out.

“Financial institutions as part of their lending keep talking to us on repayment. Its part of their process when a part of the loan is due and its part of the exercise to check with us if the repayment schedule is on. Things are getting aligned and SBI Caps is expected to submit their report within the next 45 days,” a senior official of UB Group noted.

Kingfisher Airlines is hoping to go in for fund raising through a Rights Issue or a GDR during the second quarter of the ongoing fiscal. Sources indicate that around close to Rs 1000 crore will be restructured ahead of the fund raising. Prior to appointing SBI Caps, Kingfisher Airlines had hired Seabury Aviation & Aerospace, a management consultancy firm to advise them on financial and operational performance. Company sources detail that a report from Seabury should have been tabled by now.

Kingfisher operates a fleet of 61 aircraft, including A319, A320, A321, A330 and short-haul ATRs. It holds 21% market share in the domestic market. The airline serves to seven international destinations, besides 63 cities in the domestic market. The company has 21 per cent market share in the domestic civil aviation market and is rolling out an ambitious overseas network expansion plan, which is bleeding.

For the third quarter ending December 2009, Kingfisher posted a net loss of Rs 419.96 crore in the third quarter of 2009-10. The fourth and 2009-10 results are expected on May 27.