The board of Kingfisher Airlines is considering a proposal to cut its debt by more than half by selling property, converting loans from its parent company into equity, and changing the terms under which it leases aircraft. Shares in the airline rose by 8% on the news.
The management is also expected to propose a preferential issue of equity to the promoters and other investors, specifically owner Vijay Mallya.
The preferential issue of equity, if approved, will replace a rights issue of Rs 2,000 crore approved by the board in August. Once these plans are approved, Kingfisher will approach banks for up to Rs 500 crore of working capital to buy fuel and pay salaries, according to people familiar with the matter. Kingfisher's lenders have made it clear that the airline would have to come up with a credible business plan.
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