The Board of Vijay Mallya-led Kingfisher Airlines sat through a marathon meeting lasting several hours in Mumbai on Monday, discussing a string of options, including roping in a strategic investor to infuse funds as the airline struggles to meet even daily expenses.
A 13-bank consortium led by State Bank of India (SBI) has demanded monetary commitment to the tune of Rs 800 crore from the promoter group before it decides on loosening purse strings to the carrier, buried under a debt-mountain of Rs 7,057.8 crore.
Wary banks are not keen on lending more to KFA. UB Holdings, Vijay Mallya's spirits company, has provided the airline with corporate guarantees totalling Rs 9135 crores, on a total asset base of about Rs 12,000 crore.
Analysts are keenly watching how KFA and UB Group treads the delicate path amid fears that the promoters have over-leveraged their holdings.
A banker who did not wish to be identified said creditors would go through the promoters' pledging over 90% of their shares in Kingfisher Airlines and United Spirits with a fine tooth comb. They raised about Rs 592 crore and Rs 3,600 crore respectively as debt.
The promoters have also pledged more than 10% of their shares in another group company, United Breweries to raise close to Rs 1,500 crore.
"We have to be satisfied about the viability of the company. There is no point restructuring if the company's operations are not going to be viable," said SBI managing director Hemant Contractor.
A consortium of 13 lenders owned another 23.27% of Kingfisher Airlines shares following a debt recast this year, under which a part of their loans were converted into equity.
Kingfisher has scheduled a press conference on Tuesday in Mumbai where Mallya is expected to lay down a roadmap to nurse the carrier's wounded finances back to sound health.
"Debt restructuring does look a bit challenging for Kingfisher Airlines given their current position. The company may be considering bringing in a strategic investor," said Amber Dubey, director (aviation), KPMG.