Kingfisher draws up three-month revival plan

Kingfisher Airlines Ltd, riddled with debt and with 13 of its planes grounded, has drawn up an emergency three-month turnaround plan to restore the financial health of the Vijay Mallya-owned carrier. The strategy includes a debt recast, putting grounded planes back on the flight roster and slowing down the expansion of loss-making overseas operations.
As part of a Reserve Bank of India-sanctioned relief package for the airline industry, SBI Capital Markets Ltd, representing a consortium of 15 banks, will announce a debt-recast plan for the carrier. Interest rates will be cut by at least 3.5 percentage points and Kingfisher will get seven years to pay back its loans with a two-year moratorium on principal repayments. The carrier’s debts amounted to Rs.7,413 crore as of 31 December. Under the plan, the loans will be pooled, allowing the banks to share the risk.
“The (interest) rates will come down to 11-11.5%. Also there will be a moratorium of two years,” said SBI Caps officials who did not want to be named.
The banks are likely to draw up the debt recast package in a few weeks’ time, Ravi Nedungadi, president and chief financial officer at UB Group, told Mint. UB Group is the parent of Kingfisher Airlines.
08/11/10 P.R. Sanjai & Dinesh Unnikrishnan/Live Mint

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Categories: Kingfisher Nov 2010