A consortium of 13 lenders has taken a 23.37% stake in Kingfisher Airlines as part of a debt restructuring deal. The consortium includes State Bank of India, ICICI Bank, IDBI Bank, Bank of Baroda and Punjab National Bank.
The consortium members took 116 million shares at a conversion rate of Rs 64.48 per share to cover a debt of Rs 750.09 crore. However, on Wednesday the banks could only Rs 557.38 crore, as Kingfisher shares closed the day at Rs 48.05 per share at the Bombay Stock Exchange (BSE).
The debt to equity swap was agreed by the banks and the airline last year. Kingfisher had agreed to convert the Rs 1,355-crore of the loans into shares, besides converting the promoters’ debt of Rs 648 crore to share capital. SBI Caps was mandated for the debt restructuring process.
State Bank of India and ICICI Bank now have about 11% stake in Kingfisher Airlines, while SBI was allotted 28 million equity shares on account of conversion of compulsorily convertible preference shares - a 5.67% stake in the airline valued at Rs 182.25 crore. ICICI Bank was allotted 26 million shares against the loan it had given to the airline.
Meanwhile in the US, Doug Parker, chief executive of US Airways Group, has suggested the group could merge with another carrier in the US market. He said that following the mergers of United Continental Holdings, Delta Air Lines and AMR Corp’s American Airlines, US Airways presents the last big airline deal in the US. Parker said to reporters: “I believe any of the three of them at the right time could do something with us if we wanted to and they wanted to.”
As the fifth biggest airline in the US, a merger with a smaller carrier such as JetBlue or Alaska is less likely, say analysts, who favour a merger with a larger network that would have greater synergies in cost structures and would also help attract corporate contracts for lucrative business traveler business.
Meanwhile…..
It is also worth noting that since AVIC is accelerating engine development for the C919 and Airbus is accelerating production of the A320neo we should look out for an announcement from CFM to see if the Leap X is going to be ramped up also, the pressure is on them. Moreover, Boeing will need to make some sort of announcement soon on an updated aircraft and remains under pressure to do so from Southwest.