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90% of promoters’ Kingfisher Airlines stake pledged with lenders

90% of promoters’ Kingfisher Airlines stake pledged with lenders
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First Published: Wed, Jul 06 2011. 11 34 PM IST
Updated: Wed, Jul 06 2011. 11 34 PM IST
Mumbai: The promoters of Kingfisher Airlines Ltd have pledged at least 90% of their stake with financial institutions even as the nation’s second largest carrier by passengers is struggling to pare losses and raise funds.
The promoters of the airline hold a 58.61% stake and have pledged 52.85% of this. The shares have been pledged as part of the debt recast package entered into by Kingfisher Airlines with certain of its lenders.
In a communication to the Bombay Stock Exchange (BSE) on Wednesday, Kingfisher Airlines said two of the promoting firms—United Breweries (Holdings) Ltd and Kingfisher Finvest India Ltd—have pledged their entire stake.
United Breweries (Holdings) owns 40.1% and Kingfisher Finvest owns 12.75% of Kingfisher Airlines, which competes with Air India Ltd and Jet Airways (India) Ltd.
This means, except for chairman Vijay Mallya’s 3.04% personal holding and UB Overseas Ltd’s 2.72%, the entire promoters’ stake has been pledged with financial institutions as on 6 July.
A Kingfisher Airlines spokesperson didn’t offer any comment for the story.
According to the company’s filings with stock exchanges, as of 3 June, promoter group companies had pledged up to a 50.57% stake in the company.
Kingfisher Airlines slipped 1.86% to Rs39.55 on BSE on Wednesday, while the benchmark Sensex ended at 18,726.97, almost unchanged.
As part of the debt recast programme drawn up by investment bank SBI Capital Markets Ltd, the carrier has reduced debt by about 20% to Rs6,007.30 crore in April from Rs7,651.12 crore a year ago, according to a June investor presentation.
The company said the debt recast has been completed, resulting in lower interest rates and a moratorium on loan repayments, without divulging specific details.
Kingfisher Airlines has never made a profit since its inception in 2005. It’s net loss was Rs1,027 crore for fiscal 2011 on a total income of Rs6,496 crore, against a net loss of Rs1,647 crore on a total income of Rs5,271 crore in fiscal 2010.
Following the debt recast plan, a consortium of 13 banks converted a Rs750 crore loan into 23.37% equity in the airline in April, valuing its shares at a 61.6% premium over the price prevailing that day.
The airline has not been able to go ahead with a plan to sell global depository receipts (GDRs) to raise $300 million.
Kingfisher Airlines chairman Mallya said in Singapore recently that his firm will rework its GDR plan as investors had asked the airline to do so.
According to a senior Kingfisher Airlines executive, the airline is looking at alternative funding routes including private equity.
In a separate development, BSE said on Tuesday United Breweries (Holdings) will be replaced on the BSE Midcap Index by Sujana Towers Ltd, citing lower market capitalization.
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First Published: Wed, Jul 06 2011. 11 34 PM IST