Kingfisher's debt of around Rs 7,500 crore is at stake and public sector banks are in a dilemma after the expiry of the airline's licence. How much will they get if they demand liqudiation? Why are they waiting?, reports Gopika Gopakumar of CNBC-TV18.
They are shocked and furious. Yet lenders to Kingfisher are resisting from pulling the plug on the airline even after its licence expired on December 31. it has been almost a year since KFA has turned NPA for banks. Lenders tell CNBC-TV18 that they will have to take a huge haircut if they start the recovery procedure.
Banks have an outstanding debt of Rs 7500 cores to the airline company against a collateral of nearly Rs 2000 crores which includes guarantees of UB Holding and United Breweries, shares of united spirits, Mangalore Chemicals, Mcdowell's and other tangible security like the villa in Goa and Kingfisher's other premises.
Lenders are not willing to invoke Mallya's personal guarantees including his shareholding and personal property. This could be worth a fortune, said one banker but didn't detail how much exactly. Bankers may be hesitant to attach Mallya's personal guarantee given his position as MP in the Rajya Sabha. Though bankers say they haven't been contacted by any politician. The tax authorities have also moved to recover their dues by seizing KFA aircraft.
It is possible banks may get less from liquidation if taxes and other lenders have to be paid out. It is this lack of clarity on the haircut and Mallya's perceived ability to attract investors that appear to hold back banks from thinking of liquidation but time is running out. the director general of civil aviation has expressed its dissatisfaction with the company's revival plan and failed to renew its licence.
Lenders are hopeful that the KFA management will be able to bring an investor and infuse Rs 650 crores into the company and meet the deadline of restarting the airline by February. Hopes are pinned on Etihad with some sources indicating KFA has presented to Etihad a EBITDA of USD 200 million in three years once the fund infusion goes through
The core group of lenders to kingfisher including SBI, Bank of Baroda, Bank of India, Punjab National Bank and United Bank are meeting on January 4th to take stock of the matter after the DGCA move and also discuss the viability of airline's revival plan.