'Kingfisher near deal to save airline'

The chairman of Kingfisher Airlines, Vijay Mallya, said he was close to sealing a $370 million deal with an Indian private investor, many had reported that this was Reliance Industries Mukesh Ambani, and a consortium of banks that would save the airline.

The Bangalore-based entrepreneur said he was nearing a deal with 14 banks led by State Bank of India that would provide the loss-making carrier with working capital of 6 billion rupees ($118 million). He did not name the banks.

Earlier this week, Kingfisher said its net loss for the September quarter doubled but Mallya offered little to revive its finances. It had also said it had been approached by strategic investors.

Mallya, a flamboyant liquor baron who owns a Formula One motor-racing team, told the paper he was finalising a separate $250 million equity injection from an unnamed wealthy Indian individual to recapitalise the cash-strapped carrier.

He added that he was about to conclude a deal with the banks to reduce the interest rate which the airline is currently paying on its $1.4 billion debt pile.

Mallya said on the social networking site Twitter that the report was factually wrong, but he did not elaborate.

Shares in Kingfisher, which is named after its parent firm's best-selling beer, were down more than 5 percent in early trade on Friday in Mumbai.

Kingfisher, which listed when it bought out budget airline, Air Deccan in 2008, has never made a profit and its market value has plunged 64 percent this year.

The airline became India's No. 2 private carrier since it began operations in 2005 as the economy boomed but it has become one of the main casualties of high fuel costs and a fierce price war between a handful of airlines which, between them, have ordered hundreds of aircraft for delivery over the next decade in an ambitious bet on the future.

($1 = 50.910 Indian Rupees)

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Kingfisher crisis not to impact SBI profit: MD

The country's largest public sector lender State Bank of India has said the prevailing crisis in Kingfisher Airlines would not have any impact on it's balance sheet due to small exposure to the beleagured company.


"We have Rs 12 lakh crore balance sheet and our exposure in Kingfisher Airline was small," SBI Managing Director (National Banking Group) A Krishna Kumar told reporters here, adding that the crisis would have no impact on SBI's performance.


Banks, including SBI, ICICI Bank, IDBI Bank and Punjab National Bank, have an exposure of Rs 7,700 crore to the airline.


The airline has suffered a loss of Rs 1,027 crore in 2010-11 and has a mounting debt of Rs 7,057.08 crore.


The airline is currently facing troubled times and was led to cancel a number of flights due to factors like increased costs. The beleaguered airline has cancelled 210 flights since last Monday.

The airline has said that it has requested banks for a higher borrowing limit due to rising operating, costs caused by costlier fuel prices and rupee devaluation.


The airline had effected a loan recast earlier this year, wherein some banks were given certain equity stakes, but its debts are still estimated to be about Rs 7,000 crore.


On plans of raising interest rates on savings bank account, he reiterated SBI Chairman Pratip Chaudhuri's views given last week saying SBI has no plans to raise interest rate as of now.


"Though things are changing each day but as of now we have no plan to raise interest rate on savings account or loans," Kumar said.


Asked about the status of the Indian Banking sector in view of the prevailing slow down in parts of the world, including the US, Kumar said our banking sector was "extremely strong and stable".


He also ruled out any possibility of liquidity crunch in near future as SBI has more Statutory Liquidity Ratio.


Lenders to meet Kingfisher management on Tuesday: SBI

Bankers to the financially-hit Kingfisher Airlines have not yet taken a decision on restructuring its debt, while SBI today said that the lenders will meet early next week to take stock of the situation.


"On Tuesday, SBI and other lenders are meeting with the Kingfisher Airlines (KFA) management in Mumbai. Bankers want more information on their (KFA's) fleet, equity, continuation of fuel supply...Banks can come in as lenders not promoter. We will respond how it unfolds," said Pratip Chaudhuri, Chairman of SBI, which leads the 13-bank consortium that has lent to Kingfisher.


He, however, supported KFA chairman Vijay Mallya's view on allowing foreign direct investment in the aviation sector.


"Unless another airline joins in, we don't see much of value being added to KFA... They (KFA) have said that they are waiting for government to relax norms on aviation policy.


There is clear indication that KFA wants to induct foreign airline as equity partner," Chaudhuri told reporters on the sidelines of an Assocham event here.


He said lenders have asked KFA to bring Rs 800 crore as the equity, of which the company said that Rs 400 crore has already been arranged.


On being asked whether that was a pre-condition before the debt restructuring, he said, "We want to see that money (Rs 400 crore) coming in. That has to be simultaneous."


Kingfisher is looking for additional working capital to tide over its severe cash crunch. It approached lender-banks for a reappraisal of working capital requirements following a surge in price of fuel in recent months.


After the first round of meeting yesterday, the banks ave asked the airline promoters to put more equity into the venture and disclose additional financial details to them

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