State-run banks have no plans for a second round of debt restructuring for cash-strapped Kingfisher Airlines, which has total loan liability of Rs 6,419 crore, Minister of State for Finance Namo Narain Meena said.
"State Bank of India, leader of the consortium (of 11 lenders), has stated that at present, there is no plan (of further restructuring)," the minister said in the lower house of Parliament on Friday.
SBI has exceeded exposure limit of Rs 1,436 crore in the Vijay Mallya-promoted airline, the minister said.
The stance of the PSU banks will not augur well for Kingfisher, which has been trying to raise cash through all possible sources, including private equity firms such as TPG and other investors, but has not been successful till now.
The airline said, "Kingfisher Airlines brand and Kingfisher House in Mumbai are a part of the security package given to banks. We do not have any information on the minister's statement."
The airline, which is going through a major financial crisis with accumulated losses of Rs 4,000 crore, had approached public sector banks for a second round of equity boost in the form of working capital loan of Rs 400-600 crore.
However, aviation analysts are skeptical that infusion of Rs 400-600 crore will be of much help for the financially starved airline.
"The company needs large capital infusion and reduction in interest rates to be able to sustain operations," brokerage Kotak Institutional Equities said in a recent report.
"As of now, the annualised interest rate (Rs 330 crore interest in 2QFY12 for outstanding debt of Rs 7,500 crore as of Sep 2011) for the company is 18%, which is very high. Small capital infusion or incremental increase in working capital limits can only sustain operations for some more time," it said. The airline has not been able to meet its commitment to pay its full staff salaries, including pilots' pay, for more than two months.
The minister said Kingfisher is further scheduled to start repaying loans to SBI from September 2012 and that "there is a delay in servicing of interest".
Its current interest outflow for debt of more than Rs 6,000 crore is a little over Rs 900 crore per year.
The airline is in discussion with various agencies for downsizing its debt by partial payment of 3,000 crore through different accruals, which includes converting financial leases into operational leases and selling Kingfisher House.
ET