Shares of cash-strapped Kingfisher Airlines soared over eight per cent on the bourses, ahead of a board meeting of the company on Monday. The scrip closed at Rs 21.35 on the BSE, up from Friday's close of Rs 19.65. The stock had plunged 19 per cent on the BSE on Friday, the lowest in three years.
Sources say the meeting will focus on a structured life support package to address the airline's massive Rs 7,000-crore debt. It precedes a key discussion with banks scheduled for Tuesday. Meanwhile, SBI has asked Kingfisher to raise fresh equity before it considers a recast package.
“We have to be satisfied about the viability of the company. Discussions are going on,” Mr Hemant Contractor, Managing Director, SBI, told reporters on the sidelines of the World Economic Forum's India Economic Summit here on Monday.
SBI's exposure to Kingfisher Airlines is about Rs 1,400 crore, he said. “Apart from operational problems, Kingfisher has a large amount of debt and has to bring it down for us to give them fresh loans,” he said. Talks are going on with the company and the bank has not set a deadline, he added.
On Sunday, Mr Pratip Chaudhuri, Chairman, SBI, had said the company should provide information on the condition of its fleet, the worthiness of its planes, availability of equity, security of fuel supply and assurance regarding landing at different airports.
Kingfisher had earlier committed to bring in equity of Rs 800 crore of which it has already pumped in Rs 400 crore, Mr Chaudhuri said. “We expect them to bring in the balance Rs 400 crore now.”