Processing .....please wait.. 
The article has been forwarded.... 
Kingfisher Airlines approves debt-recast package
By siliconindia
|
Saturday, 27 November 2010, 03:07 IST
Bangalore: The board of Kingfisher Airlines approved a debt-recast package under which it would convert up to Rs 1,355 crore of lenders' debt and up to Rs 648 crore of promoters' debt into share capital and allot preference shares and debentures. The move is likely to pare the company's interest burden and losses.
According to KUmar Shankar.The package with lenders, following a one-time relaxation in restructuring guidelines by the Reserve Bank of India, includes rescheduling of payment of the remaining debt over nine years with a moratorium of two years, reduction in interest rates and sanction of additional funds and non-fund based facilities by lenders.
The debt burden of the airline, controlled by Vijay Mallya, stood at over Rs 7,000 crore at the end of Q3FY10.
The company told the Bombay Stock Exchange that it had received board sanctions from several lenders and expected clearances from others soon. The package is subject to execution of necessary documentation.
Shares of Kingfisher, which recently inducted Sanjay Aggarwal as CEO, have lost nearly 11 per cent in the past one month and are under-performing Sensex's 5 per cent fall.
The airline said it would allot up to 57.50 crore redeemable cumulative preference shares at par at the end of 12 years to members of the consortium of lenders in consideration of the extinguishment of the amount due under various loan facilities availed by it. These shares will be entitled to 8 per cent dividend.
The company also plans to allot up to 78 crore compulsorily convertible preference shares to the consortium members. These shares will be entitled to 7.5 per cent dividend.
The board has decided to amend the terms and conditions of 97 lakh redeemable preference shares of Rs 100 each issued to United Breweries (Holdings), part of the promoter group, to convert these shares to 9.70 crore compulsorily convertible preference shares of Rs 10 each. These shares will continue to be entitled to 6 per cent dividend.
The company will also allot up to an aggregate of 64.80 crore compulsorily convertible preference shares to United Breweries (Holdings) and Kingfisher Finvest India, the promoter companies, in consideration of the extinguishment of the amount due to them. These shares will be entitled to 7.5 per cent dividend.
Similarly, another two crore optionally convertible debentures of Rs 100 each will be allotted to Star Investments while both Margosa Consultancy and Redect Consultancy will be allotted up to 3 crore optionally convertible debentures of Rs 100 each. All debentures will be entitled to a coupon of 8 per cent.