Lenders are seeking the reversal of transactions by the ailing airline as a pre-condition to consider the second round of bailout in as many years after it posted yet another quarter of losses.
"Mallya has agreed that they would not exercise the option," said a banker requesting anonymity. But it is not clear yet whether the past transactions are being reversed.
The carrier, which is facing liquidity crunch, entered into an agreement with Mallya and his holding company, UB Holdings, where the airline had paid Rs 49.48 crore and Rs 58 crore, respectively, against the guarantees they had provided for the Rs 7,000-crore loans from banks.
The airline, promoted by liquor baron Mallya, has been teetering on the brink of collapse for a few months amid cancelled flights and non-payment of salaries. Lenders are laying down strict conditions for the next round of funding as the airline failed to improve its performance even after loan restructuring.
"Mallya has agreed that they would not exercise the option," said a banker requesting anonymity. But it is not clear yet whether the past transactions are being reversed.
The carrier, which is facing liquidity crunch, entered into an agreement with Mallya and his holding company, UB Holdings, where the airline had paid Rs 49.48 crore and Rs 58 crore, respectively, against the guarantees they had provided for the Rs 7,000-crore loans from banks.
The airline, promoted by liquor baron Mallya, has been teetering on the brink of collapse for a few months amid cancelled flights and non-payment of salaries. Lenders are laying down strict conditions for the next round of funding as the airline failed to improve its performance even after loan restructuring.
Apart from pushing the banksto a disadvantage, it is also a regulatory violation when promoters get paid for what is essentially their business. "The system of obtaining guarantees should not be used by the directors and other managerial personnel as a source of income from the company,'' RBI has said.
"Banks should obtain an undertaking from the borrowing company as well as the guarantors that no consideration whether by way of commission, brokerage fees or any other form, would be paid by the former or received by the latter, directly or indirectly."
Amid this controversy, SBI Capital Markets, the mandated firm to restructure its loans, on Friday made a fresh case for Kingfisher Airlines on grounds that initiatives taken by the government makes it a viable proposition.SBI Caps has asked banks to provide Rs 800-1,000 crore of fresh loans for the airline's revival.
Kingfisher and lenders discussed various alternatives of funding the airline. Bankers said they needed time to give their response.
"Banks should obtain an undertaking from the borrowing company as well as the guarantors that no consideration whether by way of commission, brokerage fees or any other form, would be paid by the former or received by the latter, directly or indirectly."
Amid this controversy, SBI Capital Markets, the mandated firm to restructure its loans, on Friday made a fresh case for Kingfisher Airlines on grounds that initiatives taken by the government makes it a viable proposition.SBI Caps has asked banks to provide Rs 800-1,000 crore of fresh loans for the airline's revival.
Kingfisher and lenders discussed various alternatives of funding the airline. Bankers said they needed time to give their response.
(Source- http://economictimes.indiatimes.com)
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