UB group unlikely to infuse funds into Kingfisher Airlines

Bangalore: The UB Group is unlikely to bail out its company, Kingfisher Airlines, through infusion of funds from its other companies.
A top official with the UB Group told Business Line that the airline will have to generate its own funds for its operations as well as expansion. The official said each entity in the group has always followed this practice, which has been extremely beneficial for all its companies as well as its shareholders.
An analyst with a brokerage firm who did not wish to be named also said group companies such as United Spirits and United Breweries have their own funding requirements and are on an expansion mode, and hence diverting funds from some of these companies may not be in the interest of the shareholders of these companies.
United Spirits needs at least $140 million for its own funding requirements for the next 18-24 months and it also needs to pay back about £535 million it raised as debt to acquire Whyte & Mackay in mid-2007. However, the company does not have to start paying back the debt till mid-2010.
The head of research for Angel Broking, Mr Hitesh Agarwal, said that instead of sourcing funds from group companies, the promoters of the airline should raise funds through equity dilution or through debt.
Kingfisher Airlines is already in talks with a few PE Funds to raise about $400 million through equity dilution. It may now become easier for the airline to raise funds after its recent alliance with Jet Airways.
23/10/08 K. Giriprakash/Business Line

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Categories: Kingfisher Oct 2008