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 had said yesterday.
Reacting to the development, shares of the company opened on a bullish note and then gained further ground and touched an intra-day high of Rs. 10.53 on the BSE, higher by 5% from its previous closing price.
Similar movement was witnessed on the National Stock Exchange, where the stock gained 5% and hit the upper circuit limit for the day at Rs. 10.50.
"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 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.