Take possession of Kingfisher House.
By R. Chandrasekaran
CHENNAI: The woes of the beleaguered airliner Kingfisher Airlines, owned by business tycoon Vijay Mallya, deepen, with lenders taking possession of its headquarters in Mumbai as part of the consortium banks’ efforts to recover the loans lent to the airliner.
The group of 14 banks led by State Bank of India has taken over “Kingfisher House”, which is close to Mumbai domestic airport, as the consortium of banks launches the second phase of recovery of loans from the troubled airliner. The lenders are likely to put the asset for sale soon.
Kingfisher Airlines owes close to Rs.70 billion, including unpaid interest, to the 14 banks, which includes public sector as well as private sector banks. The government-controlled State Bank of India (SBI) has lent the maximum worth Rs.16 billion, followed by Punjab National Bank and IDBI Bank by Rs.8 billion each, respectively. Private sector banks Federal Bank and Axis Bank have lent Rs.900 million and Rs.500 million, respectively.
The overall exposure to Kingfisher by the banks was estimated at Rs.63.6 billion, which excludes unpaid interest. Apart from the consortium of 14 banks, there are three more lenders, Oriental Bank of Commerce, Jammu and Kashmir Bank and Srei Infrastructure Finance Ltd., who have lent money to KFA.
Earlier in May, Mallya canceled the power of attorney issued in favor of IDBI Trusteeship Services on pledged shares of United Spirits after the consortium of Banks started selling the pledged shares. Reports indicated that he was not happy with the public sector banks for selling the shares pledged by him and his companies. In fact, there was a report that he sued lenders for selling a part of United Spirits that was pledged and worth about Rs.1 billion.
In the first phase of the recovery, the consortium banks have reported to have recovered Rs.5.5 – Rs.6 billion through the sale of pledged shares of the airlines as well as associate companies. The airline’s license was suspended in October 2012 by the Directorate General of Civil Aviation after its employees struck work.0
To contact the author, email to rchandrasekaran@americanbazaaronline.com