Kingfisher to rework $300 mn fund-raising plan

Kingfisher to rework $300 mn fund-raising plan

Singapore: The strapped-for-cash Kingfisher Airlines Ltd will rework its much-delayed plan to sell global depository receipts (GDR) to raise up to $300 million (Rs 1,341 crore), but no deadlines have been set for this, chairman Vijay Mallya said on the sidelines of an international airline summit.

The Mumbai-based carrier had originally planned a GDR issue after December, but this has been stalled by high fuel prices and a slump in the company’s shares.

“Investors have asked (us) to come back with a revised plan," Mallya said.

Kingfisher, with a debt of at least 6,000 crore, has been hoping to raise $250-300 million through an issue of GD on the Euro MTF Market of the Luxembourg Stock Exchange, but has not been able to as its stock price has slumped.

The airline, which hasn’t made a profit since its inception in 2005, had appointed investment banks CLSA Singapore Pte Ltd, Citigroup Global Markets Ltd and Morgan Stanley and Co. International Plc to manage the GDR issue besides global legal firm Linklaters Llp for preparing the prospectus, Mint had reported on 21 February.

The GDR issue is one part of the airline’s financial restructuring exercise. Another was completed on 6 April when a consortium of 13 banks converted the 750 crore the airline owed into 23.37% equity in the company, valuing the shares at a 61.6% premium to the price that day. Consequently, promoter holding in the airline declined from 66% to 58%, Mint had reported on 14 April.

The company will need to do more, the Centre for Asia Pacific Aviation (Capa) said in its 2011 outlook.

“The plan to raise $250-300 million from the capital markets was set several months ago, following which the losses in Q3-Q4 (of 2010-11) have been higher than expected and this amount may no longer be sufficient.

The performance commitments to the banks for the last two quarters will not have been met," the consulting firm said. “If oil prices move upwards and remain high for some time, it may not be possible to raise equity from the markets. If this is the case the shareholders which now include banks as well as the promoter may need to infuse additional equity as most of the other options for funding have been exhausted."

Kingfisher made a net loss of 1,027 crore in 2010-11, down from 1,647 crore in 2009-10.

Mallya said he remained optimistic about Kingfisher’s financial restructuring.

“You know," he said, defending concerns on low investor interest in the carrier, “you should check out how much shareholder value I have delivered in the last 25 years."

Mallya said the airline will join international airline alliance OneWorld by February 2012 and that it plans to rework its international flights accordingly. This will include reviewing its flights to London and Hong Kong.

New plane deliveries will only start in 18 months from Airbus SAS and the airline has not cancelled an order for five super-jumbo Airbus A380s, Mallya reiterated.