Lenders, Kingfisher fail to finalise funding deal

Agencies Posted: Feb 18, 2012 at 1016 hrs
Mumbai Lenders to cash-strapped Kingfisher Airlines today failed to finalise a deal for providing additional funds to the firm despite six hours of discussions, until late Friday night, although the company\'s chairman Vijay Mallya said it was a \"long, good and comprehensive\" meeting.

The marathon meeting of 18 bankers including the top officials of SBI, Bank of Baroda and Corporation Bank remained inconclusive and will be held again to decide if additional funding could be provided to the to debt-laden airline, sources said.

The meeting began at around 4 pm this afternoon and continued till about 10 pm here to discuss working capital and other loans for Kingfisher. Yesterday, it posted net loss of Rs 444 crore for this fiscal\'s third quarter, ended December, and is battling spiralling interest and fuel costs.

A senior banker, present at the meeting, said that the lenders were appreciative of the \"viability report\" prepared and circulated by SBI Capital, the advisor to Kingfisher, but could not reach unanimity on the final package.

After the meeting, Kingfisher chief Vijay Mallya told reports that \"it was a very long, good, comprehensive meeting,\" but refused to divulge any details.

State Bank of India Chairman Pratip Chaudhary refused to talk about the meeting, which took place at SBI headquarters here. SBI leads the consortium of Kingfisher\'s 18 lenders.

There was a huge media presence at the meeting venue, but the journalists were asked to leave the venue at around 9 pm. The meeting continued till about 10 pm.

There have been reports that the airline has been struggling to even pay the employee salaries for last couple of months, while it has accumulated a debt of over Rs 10,000 crore.

Kingfisher owes an estimated Rs 1,500 crore to SBI, about Rs 400 crore each to Corporation Bank and Bank of Baroda and Rs 380 crore to Federal Bank, among other lenders.

SBI had last month said it would be difficult for lenders to provide more funds, unless Kingfisher pays Rs 100 crore to restore a bank guarantee invoked after the carrier failed to repay its loans or makes good the default.

Yesterday, auditors of Kingfisher Airlines had raised concern over its ability to stay afloat and said it would need to inject more money to remain a \"going concern\".

\'Going concern\' means that the firm in question would not go broke or be liquidated and remain operationally afloat in the foreseeable future.

In a quarterly report, Mallya said that the latest financial statement had been based on the premise that \"the company is a going concern\", but conceded that \"the company has incurred substantial losses and its net worth has been eroded\".