Banks invoke 3.13 mn pledged shares in Kingfisher Airlines

Holdings of United Breweries in United Spirits has come down by 2.646 mn shares

Banks that had lent to Kingfisher Airlines have invoked 3.13 million pledged shares, the airline informed stock exchanges.

Likewise, at the beginning of the month, lenders had invoked pledge shares in United Spirits worth Rs 500 crore. Subsequently, the holdings of United Breweries in United Spirits (USL) came down by 2.646 million shares.

Typically, a lender invokes pledged shares to sell in the open market when the pledgee defaults or fails to provide additional margin if there is a sharp fall in the value of the pledged shares.

The move comes when banks have already started selling USL shares, which were pledged with them.

Banks have 26 million shares USL, of which around 10 million have already been sold. According to bankers, SBI, which is conducting the process, has started releasing the proceeds raised by selling USL shares to the banks.

Incidentally, Diageo’s open offer to shareholders of USL starts tomorrow. While the open offer price is set at Rs 1,440, much lower than the prevailing market price, banks have said they will not participate in the open offer.

After deciding to recall the loan from the troubled airline, banks have started the recovery process of their dues of roughly Rs 7,000 crore. The value of collaterals including the value of the guarantees of UB Holdings, the personal guarantee of Mallya, and physical assets, is worth around Rs 6,500 crore.

Kingfisher Airlines shares closed on Tuesday at Rs 7.67 on the BSE, down 1.8 per cent compared to the previous close.