Kingfisher Airlines mulls rights offer to pare debt

Kingfisher Airlines Ltd, the Indian carrier owned by the nation’s largest brewer, may raise as much as $175 million selling shares and global depository receipts to repay debt.

The carrier may seek between $80 million and $100 million in a rights offer and a further $60 million to $75 million selling Global Depository Receipts (GDRs), Ravi Nedungadi, chief financial officer of the airline’s parent UB Group, told the UTV television channel. The money may be raised within six months, he said in an interview.

Kingfisher Airlines has Rs 60,00 crore ($1.2 billion) of debt, almost a third of it coming from payments made to purchase new aircraft, Nedungadi said today. Unprofitable Kingfisher, Jet Airways (India) Ltd., the nation’s largest domestic carrier, and other airlines are all seeking to sell new shares to pare debt and interest payments amid losses from a slump in travel demand.

Kingfisher earlier this year delayed taking delivery of Airbus SAS A380 aircraft to 2014 from 2012 after scrapping three orders with the Toulouse, France-based planemaker last year. The airline’s passenger numbers fell for a third consecutive month in August, according to government data.

Kingfisher will bring in a strategic partner if government rules permit, Nedungadi said. The company hasn’t pursued expressions of interest made by foreign airlines as Indian government rules don’t permit overseas carriers from buying stakes in local airlines, Nedungadi said.

“We are waiting for a change in regulations,” he said. Kingfisher fell 0.3 per cent to Rs 52 as on 12:11 p.m. in Mumbai trading. The shares have gained 28 per cent this year.

Jet Airways said earlier this month it plans to sell shares to institutional investors as part of its $400 million fund-raising to cut debt and raise working capital.