Emirates signals Kingfisher Airlines stake buy

http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/emirates-signals-kingfisher-airlines-stake-buy/articleshow/16585666.cms

28 SEP, 2012, 11.18AM IST, PARTHA SINHA & MAYUR SHETTY,TNN

"All that I would say is that we had a good meeting with the lenders. There are confidentiality clauses between the banks and the client, and I will not say any further," Mallya said.

“All that I would say is that we had a good meeting with the lenders. There are confidentiality clauses between the banks and the client, and I will not say any further,” Mallya said.

MUMBAI: Dubai carrier Emirates is believed to have signalled an early interest to acquire a stake in the troubled Kingfisher AirlinesBSE -4.95 % with riders that the latter hammers out long-term loan restructuring and revamp the business plan with a realistic chance of survival.

Kingfisher chairman Vijay Mallya met the consortium of lenders in Bangalore on Thursday to talk about plans to recapitalize the company after the government allowed foreign carriers to pick up 49% stake in domestic airlines. The lenders have decided to appoint SBIBSE 0.20 % Capital Markets to recommend actions required to get the airline back on track.

“All that I would say is that we had a good meeting with the lenders. There are confidentiality clauses between the banks and the client, and I will not say any further,” Mallya told TOI. Lenders said they have not been informed about any definitive FDI proposal by the Kingfisher management in the meeting.

Last week, Mallya re-engaged with top Emirates officials when the Indian billionaire was in Singapore to attend the Formula 1 event, sources said. Post those talks, officials from both the companies are working out details on how to take the conversation forward, they added. “Why would I meet Emirates in Singapore…? I was there as part of Force India team. I won’t comment on speculation. FDI in aviation was announced just a few days back,” Mallya said.

In response to a query on the airlines’ interest in Kingfisher, an Emirates spokesperson said: “India was one of the world’s most important aviation markets. While Emirates’ philosophy is to focus on organic growth, we always welcome any reform which liberalizes markets, including FDI rules.” He refused to comment on specific queries pertaining to talks with the Indian carrier.

On Thursday, Kingfisher stock on BSE closed at Rs 17, up 8% on the day. The stock has more than doubled from its all-time low of Rs 7, touched on August 13. The airline has a market cap of Rs 1,371 crore at the current stock quote.

Sources said that Mallya will need to convert a large part of the airlines’ debt into equity or into long-term debt instruments. Currently, the struggling airlines has a debt of between Rs 7,500 crore and Rs 8,000 crore on its books. In the run-up to FDI announcement, Kingfisher has been linked to Middle East carriers like Etihad, among others.

Meanwhile, lenders said there was a proposal from Kingfisher to offer alternative security in lieu of Mallya’s Kingfisher Villa in Goa. But they have not acquiesced to the proposal. Lenders said that the only way they saw the airline being revived was by Mallya unlocking value from other businesses and investing the funds in the troubled airline.

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