To accommodate further lending to debt-laden Kingfisher Airlines
, its group holding firm United Breweries (Holdings) today said it is hiking its loan limit for the ailing carrier from Rs 300 crore to Rs 750 crore.
UB Holdings has sought approval from its shareholders to revise the lending limit for Kingfisher and to authorise its board of directors to take necessary actions in this regard, the company said in a regulatory filing. Shareholders of UB Holdings in September 2008 had approved lending funds to Kingfisher to the tune of a maximum amount of Rs 1,500 crore. Later in 2010, the company got approval of shareholders for a revision within this overall limit, pursuant to which the loans for Kingfisher were capped at Rs 300 crore and investments at Rs 1,200 crore.
The revision was done to facilitate the conversion of loans given to Kingfisher into convertible/no-convertible securities, as required by the debt recast agreement between the airline and a consortium of its lenders. "To accommodate further lending to Kingfisher Airlines if required, it is proposed to realign these limits further by increasing the lending limit to KFA from Rs 300 crore to Rs 750 crore and reducing the investment limit from Rs 1,200 crore to Rs 750 crore, thus maintaining the overall limit of Rs 1,500 crore..." UB Holdings said in a shareholders' notice.
The company further said that its directors recommend passing of this resolution. Shares of UB Holdings today fell by about 4 per cent to Rs 61.05 at BSE, while those of Kingfisher rose by about 5 per cent to Rs 10.03. Banks recently decided to start the process of recalling their loans, totalling over Rs 7,500 crore, after discussions with Kingfisher failed to yield desired results for a mutually agreeable mechanism for revival of the currently-grounded airline.