Kingfisher to sell property to fly out of debt
14 November 2011 04:59 am
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MUMBAI: The board of Kingfisher Airlines (KFA) will today consider a proposal to cut debt by more than half by selling property, converting loans from its parent company into equity, and changing the terms under which it leases aircraft.
The management of the airline, which has cancelled 200 flights in the past week, leading to fears it is close to bankruptcy, says its plan will result in debt coming down from Rs.6,500 crore to Rs.3,000 crore.
The debt-reduction plans to be placed before the board were spelt out in a presentation, to potential financial investors on November 6.
The management is likely to propose a preferential issue of equity to the promoters and other investors, meeting a key demand of banks that are insisting Vijay Mallya, the flamboyant tycoon who owns the airline, infuse equity into the troubled carrier.
Kingfisher is promoted by Mallya's UB Group, which owns United Spirits, India's biggest liquor company. The UB Group will also convert Rs.675 crore of debt into equity as part of the plan to pare debt. (Economic Times)