Kingfisher lenders hope airline mgmt won't let go belly up

"We (the lenders) are for seeing the airline turn around and not getting grounded. We hope the promoters won't let the present crisis get more complicated. After all, we don't think chairman Vijay Mallya will let his image be tarnished by letting the airline go belly up," a senior official of a public sector bank told PTI here this evening.

The banker said: "None of us wants the airline to go bust. If that happens, banks will be a bigger casualty than the airline."

When asked about whether banks are looking at recovery measures by monetising the collaterals, the banker said by doing that the lenders won't be able to recover not even 10 per cent of their outstanding to the airline.

The Vijay Mallya-owned airline and its promoters have most of their shares and assets pledged with banks, including the brand Kingfisher (pledged for a value of Rs 4,100 crore) and two of its properties--the Kingfisher Villa in Goa and the Kingfisher House in Mumbai, together valued at around Rs 200 crore.

"We hope the talks that Mallya is holding for stake sale in his other concerns like United Spirits (with UK's Diageo) will fructify soon. If that happens Mallya could recapitalise the airline and then we bankers can look at recasting his existing loan or even fund fresh working capital requirements," the banker said.

When asked about the amount that banks are looking at as fresh capital infusion by the airline for a fresh lifeline, he said normally a CDR involves the promoters bringing in at least 25-30 percent of the overall CDR package in fresh equity. At 25 per cent, this works out to be around Rs 1,750 crore as the airline's outstanding principal alone is over Rs 7,000 crore. (MORE)