Mumbai: The board of Kingfisher Airlines on Thursday approved raising Rs 2,000 crore through a rights issue. The decision came after the airline's attempts to raise $350 million by selling global depository receipts failed to attract investors.
The financially-strapped airline, which is in the midst of a debt restructuring, is seeking to raise Rs 2,000 crore, substantially higher than its current market cap of Rs 1,172 crore, leading some equity analysts to believe the promoters may not subscribe in proportion to their current holding in the company. If that were to happen, there would be a drastic dilution in the 59% stake held by the promoters - liquor baron Vijay Mallya and companies belonging to the United Breweries (UB) Group. United Spirits Ltd, India's largest liquor company, is Mallya's flagship.
"This is not a normal rights issue offer by the company. It is pursuant to a debt recast that was agreed upon by the lenders earlier and is being done under pressure from lenders," said SP Tulsian, independent investment analyst.
The company will have to price its shares at Rs 45 each, almost double Friday's closing price of Rs 23, to raise Rs 2,000 crore.
27/08/11 Economic Times
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