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02-23-2012, 11:23 AM #1
Lenders yet to agree on fresh loan to Kingfisher
A consortium of lenders to Kingfisher Airlines has not yet agreed to extend further loan to the beleaguered carrier, which urgently needs funds to save it from collapse, three banking sources told Reuters.
Senior executives of Punjab National Bank, IDBI Bank and Bank of Baroda, which between them have lent about 20 billion rupees to Kingfisher, have not yet reached any deal to lend more to the carrier.
The executives did not want to be identified as they are not allowed to speak about individual clients.
Earlier it was reported that State Bank of India, the biggest lender to Kingfisher, had decided to lend 16.5 billion rupees to the ailing carrier.
Vijay Mallya, the flamboyant liquor baron who owns a majority stake in Kingfisher, is seeking working capital loan from lenders to keep the carrier flying. The airline has cancelled more than a hundred flights since Saturday and lost dozens of pilots in the past two months as its cashflow dried after tax authorities froze its bank accounts.
Of the 64 planes in its fleet, Kingfisher is now using just 28, disrupting the travel plans of thousands of passengers across the country.
"I don't think any individual bank can take a decision," said the source at the Punjab National Bank, India's second-largest public sector lender. "It will have to be decided by the consortium." He said there was no proposal with the bank to extend loan to Kingfisher.
Kingfisher has mandated SBI Capital Markets, the investment banking arm of State Bank of India, for restructuring its $1.3 billion debt.
SBI Caps had submitted a proposal to Kingfisher's consortium of 16 lenders last Friday. "We have to study the proposal, seek clarifications and then take a call individually," said the source at IDBI Bank.
"It is a complicated issue and it will take time," said another source.
By 11.17 a.m, shares in Kingfisher were up 0.75 percent at 26.95 rupees, while State Bank of India was 3.58 lower at 2364.60 rupees on Wednesday.