Mallya may dilute 15% stake in merged airline

Mumbai: Liquor baron Vijay Mallya could end up diluting 15-20 per cent of his 76 per cent holding in the merged airline as a result of Deccan Aviation’s proposal to raise Rs 1,600 crore and expand authorised capital by Rs 350 crore, said airline experts.
Mallya is trying to raise Rs 1,600 crore for its airlines business through Deccan Aviation, the listed company into which he plans to merge Kingfisher Airlines. Deccan has called for an EGM on March 18. Deccan also plans to expand its authorised capital from Rs 150 crore to Rs 500 crore by adding 25 crore shares of Rs 10 each and one crore preference shares of Rs 100 each.
‘’This is meant for the overall expansion and international foray of Deccan and Kingfisher Airlines,’’ said Deccan Aviation Chairman GR Gopinath. UB Group executives were not available for comments.
‘’The merged entity will be a big airline and require a lot of money. The target of Rs 1,600 crore looks reasonable given their plans to fly abroad. To start with 4-5 wide-body planes, you would need Rs 750 crore,’’ said a senior industry expert. The funding would also help the two airlines sustain the cash burn.
05/03/08 Ranju Sarkar/Business Standard

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Categories: Deccan Mar 2008, Kingfisher Mar 2008