SREI Infra buys $72m of Kingfisher debt

A debt fund managed by SREI Infrastructure Finance has bought about Rs 400 crore worth of debt of Kingfisher Airlines from ICICI Bank , its vice chairman said on Monday.

"There was an opportunity because of the various securities package and returns which were coming along with it, so based on that, the fund saw an opportunity," SREI's vice chairman Sunil Kanoria told CNBC-TV18. Below is an edited transcript of the interview on CNBC-TV18. Also watch the attached video. Q: What exactly are the contours of this deal? Can you confirm that you have indeed taken on this more than Rs 400 crore of debt exposure?
A: No it's a wrong statement. SREI has not acquired the debt. It is one of the debt funds we manage that has taken the debt. It invests in opportunities where they see good return and it has secured itself well and saw an opportunity so they have made that investment. Q: Which specific debt fund is this and does that also imply that the entire collateral that UB (United Breweries) had pledged with ICICI Bank also shifts over to SREI Infrastructure or to your debt fund?
A: It is to the debt fund, so it has well collateralised itself with all the security and all. We saw an opportunity. It is an India global debt fund, which we have been managing for many years. Q: Collateral as securities would imply what? Including UB shares?
A: Of course, all the security comes along with it that’s why it has seen an opportunity overall and I would not be able to comment much on the details of what security package and all but it has well securitized itself and saw an opportunity so therefore they have invested in it. Q: Can you just throw some more light on what the rational is behind taking up this debt and what kind of opportunity do you see because for such a long time now there have been constant discussions on pumping some kind of equity into the company. None of that has come through, the banking consortium meets later this week as well to decide on what is to be done from here?
A: No as I said it has well securitized with other securities and shares and therefore it saw an opportunity that it would gain from it over a period of time and therefore it has invested. I cannot make any further comment beyond that. It was a business which the fund felt interesting and it has well securitized itself. Therefore it has invested with expectation of a return.
It is during the challenging time that they see the opportunity. Q: Yes that’s what we are trying to understand where the opportunity is. Is it your sense that there is some kind of potential deal by which Kingfisher Airlines or any potential buyer could also pair off this debt and SREI Infrastructure’s debt fund could benefit from it? Are you looking to get higher returns in terms of higher yield? How does it work?
A: Of course it is seeing it as a return on yields that’s why it has taken otherwise it would not have. Q: Has the Kingfisher management also been part of these discussions or is it just between you and ICICI Bank?
A: It is basically with ICICI.