Mallya taps Abu Dhabi royal for Kingfisher funds

Mumbai/Bangalore: Vijay Mallya, the UB group chairman, has reached out to Abu Dhabi's Al-Nahyan royal family for a possible investment in the debt-laden Kingfisher Airlines, people familiar with the development told ET. Mr Mallya is personally leading the talks with the family, which controls a number of sovereign funds with an estimated value of more than $500 billion, they added.
Kingfisher Airlines has notched up losses of over Rs 1,000 crore thanks to sluggish demand, high jet fuel costs and a debt load of Rs 8,000 crore. It badly needs equity of at least $400 million to meet operational costs and pay down some of its debt.
People close to the development said discussions are at a very preliminary stage and the board of Kingfisher Airlines is not yet involved. Details such as the amount of stake and the price have not yet been broached, they added. Mr Mallya’s UB group will retain management control with at least 26% stake, going forward.
Mr Mallya has raised significant debt in the four-year-old airline, often extending personal guarantees, but raising further debt may not be easy unless more equity is added. The current promoter holding in Kingfisher Airlines stands at 66%, giving Mr Mallya enough room to bring in new investors. Kingfisher shares rose 2% to end at Rs 50.90 on BSE on Friday.
Kingfisher has been looking to raise equity for a long time but a combination of bad market and high price expectations prevented the deal from happening. TPG Capital and Indigo Partners are among the funds that the airline was talking to. The company is also banking on the government opening up the aviation sector to foreign airlines.
27/06/09 Rumi Dutta & Boby Kurian/Economic Times

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Categories: Foreign Jun 2009, Kingfisher Jun 2009, New Jun 2009