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ICICI Bank sells Kingfisher debt to Srei Infrastructure Finance

BS Reporters  |  New Delhi/ Mumbai 

India’s largest private lender ICICI Bank Ltd sold its entire Rs 430 crore exposure in Kingfisher Airlines Ltd to a debt fund managed by the Kolkata-based Srei Infrastructure Finance Ltd, even as pilots at the cash-strapped airline stepped up pressure on the management for “immediate payment” of salaries.

ICICI Bank’s move comes hardly a week after some persons acting in concert with the promoters, who had opted into Kingfisher Airlines through the optionally convertible debentures (OCDs), sold part of their stake to the Mumbai-headquartered non-banking finance company LKP Finance, which now holds nearly 16 per cent stake in the airline.

After offloading the debt at par, ICICI Bank now holds around three per cent stake in the airline. Earlier, it had 5.68 per cent stake, after converting the bonds the airline had issued to it lenders following the November 2010 debt recast. Still 14 of the 18 lenders to Kingfisher together hold a little over 21 per cent in the airline.

ICICI Bank confirmed it has sold its entire debt exposure in Kingfisher Airlines. "ICICI Bank recovered the entire debt exposure of Rs 430 crore to Kingfisher Airlines. ICICI Bank currently does not have any debt exposure to the airline," a spokesperson of the bank said without detailing further.

Meanwhile, Reuters agency reported lenders to Kingfisher Airlines might sell assets held against their loans as they were losing hope the carrier would be able to bring in outside investment. Lenders will meet on Thursday to decide on a course of action. Three bankers involved in the process said they would consider invoking securities and guarantees against the debt to recover their money, said the report.

Pilots’ agitation: Talks fail
Despite this small respite, the operations of the airline, continued to be truncated as about 100 pilots and engineers gathered at their Mumbai office on Monday to meet chief executive officer Sanjay Aggarwal. "We want immediate payment of two months' salary. We have only been hearing assurances and have not been paid for the last five months,'' said a pilot.

Aggarwal later in the day met with the agitating pilots and said they will try to give a months' salary by Thursday, but again there was no assurance

Meanwhile, the PTI reported a section of pilots had decided to continue their agitation as there was no assurance from the management about salary payment.

"...the management did not offer any commitment as to when they intend to pay us. So, we have decided to continue our agitation," Captain Yatin Pandit, representing the striking pilots, told reporters.

Eighteen flights in Bangalore, four from Mumbai and three from Delhi were cancelled on Monday, said pilots.

A Kingfisher spokesperson, however, said pilots are not on strike and only a single flight from Mumbai was cancelled because the aircraft was under maintenance.

The airline is currently operating only 12 planes and around 90 flights daily. It has 43 planes in its fleet and is expected to return up to nine Airbus and ATR planes to lessors.

Both Delhi and Mumbai airports have filed cheque-bouncing cases against the airline. Kingfisher Airlines owes over Rs 35 crore to the Delhi airport and Rs 60 crore to the Mumbai airport for landing, parking and various other airport charges.

Promoters’ stake dips
Meanwhile, the promoters’ holding in the airline has dropped to 35.86 per cent, the lowest since the carrier became a public listed company after acquiring Deccan Airways. Nearly 95 per cent of their holdings have been pledged. The promoters currently hold shares worth about Rs 350 crore in Kingfisher Airlines, but the value of their non-pledged shares is worth about Rs 30 crore. The total market value of Kingfisher currently stands at about Rs 960 crore.

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First Published: Tue, July 03 2012. 00:06 IST