According to a report in the Economic times, the board of directors of the struggling Kingfisher Airlines will Monday mull over the proposal to slash over one-half of its debt which currently stands at a rather disquieting figure of $1.3 billion.
The proposal for reducing the debt includes some strategic measures including the conversion of loans from the cash-strapped Kingfisher Airlines’ parent company into equity as well as making a change in the terms pertaining to the lease of aircraft by the company.
The newspaper report further revealed that the carrier will apparently propose a preferential issue of shares to investors, in order to fulfill one of the main demands of banks which are insistent that additional funds be brought in by its billionaire-founder Vijay Mallya.
Going by the Economic Times’ report, the owners of the carrier have been urged by State Bank of India – the main lender in a 13-bank consortium – and other banks to inject Rs 8 billion ($160 million) in equity.
The report quoted a statement by State Bank Chairman Pratip Chaudhuri, who said that even though Kingfisher is a “valued” company, it still needs to divulge its plans related to the streamlining of its day-to-day requirements of fuel, fleet and finance, to manage its operations.
Meanwhile, Kingfisher CEO Sanjay Aggarwal told the newspaper that the carrier intends raising funds by changing the nature of lease agreements and selling real estate to lower interest costs and “reduce debt levels to reasonable limit.”