Kingfisher Airlines is back with a debt restructuring plea but banks are unwilling to take a fresh haircut this time citing the company's weak finances and the loss they incurred on converting a part of their loans into equity. In addition, they fear that a fresh recast will force them to treat the loans as a non-performing asset (NPA), in line with the Reserve Bank of India norms.
Further, they pointed out that Kingfisher was yet to fulfill a part of its commitment which included filing of the assignment agreement for the brand. This agreement with the Registrar of Trademarks would transfer the ownership of the brand to the lenders which will help banks trigger the default clause.
While Kingfisher has not formally approached lenders with a proposal, bankers said the private airline which has been incurring losses, is looking to raise additional short-term loans, issue lines of credit in lieu of cash deposits lying interest free with lessors, substituting high-cost rupee debt with low-cost foreign currency loans and also raise Rs 2,000 crore via a rights issue.
Kingfisher Airlines denied on its part that it was going for another debt restructuring but said it had sought lenders' help to substitute high-cost rupee borrowings with low-cost foreign current debt.
It has also asked banks to "appraise working capital requirements in the usual course, to account for changes in international prices of fuel and the change in rupee-dollar parity," Ravi Nedungadi, President and group Chief Financial Officer said in a statement.
"The banks are in active consideration of these requests and there is absolutely no question of another debt recast," he added.
TOI / Reuters