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With the turnaround plans for Kingfisher Airlines yet to take off, ICICI Bank has bailed out, selling its entire Rs 430-crore debt exposure in the airline.
The buyer is a debt fund managed by Srei Venture Capital Limited (SVCL), the fund management arm of Kolkata-based Srei Infrastructure Finance Ltd (SIFL).
In a statement, ICICI Bank said it has ‘recovered’ the entire debt exposure of Rs 430 crore to Kingfisher Airlines. India’s largest private sector bank, however, owns 2.07 per cent stake in the airline.
The buyer is a debt fund managed by Srei Venture Capital Limited (SVCL), the fund management arm of Kolkata-based Srei Infrastructure Finance Ltd (SIFL).
In a statement, ICICI Bank said it has ‘recovered’ the entire debt exposure of Rs 430 crore to Kingfisher Airlines. India’s largest private sector bank, however, owns 2.07 per cent stake in the airline.
Adequate collateral
Bankers say when a debt fund or an asset reconstruction company buys a non-performing loan from a bank, the transaction is usually at a discount to the face value. In a statement, Srei Infrastructure said a debt fund managed by Srei Venture Capital has invested in Kingfisher Airlines’ debt.
“It (SVCL) has invested against good security with adequate collateral. The fund saw an opportunity in the securities and commensurate returns being offered by this proposal,” said Srei Infrastructure.
The airline, which has been impacted by rising cost of fuel and competition, has struggled to repay loans and interest to banks.
All efforts to recast the airline’s debt have come to a nought so far. The cash-strapped airline has not cleared all its dues to oil companies and airports and defaulted on payment of service tax and TDS to the government.
Banks, including State Bank of India, Punjab National Bank, Bank of Baroda, ICICI Bank, IDBI Bank, and Bank of India, have been grappling with a debt exposure aggregating Rs 7,000 crore.
SBI is the biggest stakeholder in KFA, holding 3.49 per cent. IDBI Bank has a 2.16 per cent stake and Bank of India 1.08 per cent. They acquired ownership in the airline following conversion of a part of their loan into equity. Bankers will meet tomorrow to take stock of the KFA recast proposal. Banks want the promoter and promoter group, who collectively own 35.86 per cent stake in the airline, to pump in fresh equity before seeking a loan lifeline.
KFA shares closed 0.75 per cent down at Rs 11.96 per share on the BSE against the previous close of Rs 12.05.
“It (SVCL) has invested against good security with adequate collateral. The fund saw an opportunity in the securities and commensurate returns being offered by this proposal,” said Srei Infrastructure.
The airline, which has been impacted by rising cost of fuel and competition, has struggled to repay loans and interest to banks.
All efforts to recast the airline’s debt have come to a nought so far. The cash-strapped airline has not cleared all its dues to oil companies and airports and defaulted on payment of service tax and TDS to the government.
Banks, including State Bank of India, Punjab National Bank, Bank of Baroda, ICICI Bank, IDBI Bank, and Bank of India, have been grappling with a debt exposure aggregating Rs 7,000 crore.
SBI is the biggest stakeholder in KFA, holding 3.49 per cent. IDBI Bank has a 2.16 per cent stake and Bank of India 1.08 per cent. They acquired ownership in the airline following conversion of a part of their loan into equity. Bankers will meet tomorrow to take stock of the KFA recast proposal. Banks want the promoter and promoter group, who collectively own 35.86 per cent stake in the airline, to pump in fresh equity before seeking a loan lifeline.
KFA shares closed 0.75 per cent down at Rs 11.96 per share on the BSE against the previous close of Rs 12.05.
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