Mallya seeks PE funds to bailout KFA, only TPG keen

With the deadline for Kingfisher Airline's revival plan fast approaching, Mallya's United Breweries in a last ditch effort to bail out the debt-ridden airline has reached out to PE investors.

According to a CNBC-TV18 report, UB group wants to sell 24 percent stake in the airline to a consortium of private equity investors through either a fresh issue of shares or through a secondary share sale. However, so far onlybuyout major TPG has expressed interest in investing in the airline, but it is not willing to buy in more than a nine to ten percent stake.

However, the news has not independently been confirmed by TPG or the UB Group yet.

Reuters

Vijay Mallya-led UB group firm United Spirits Ltd (USL) recently offered to sell shares as a promoter in another firm, Pioneer Distilleries, through a one-day auction at the stock exchange platform.

Though Mallya may have managed a neat cash pile with the Diageo deal, analysts say the deal might not be enough to revive Kingfisher Airlines. The Centre for Asia Pacific Aviation has said a fully-funded turnaround for Kingfisher would cost at least $1 billion.

However, Mallya continues to remain optimistic.

Sources told CNBC-TV18 that the airline expects to revive operations within six to eight months post the implementation of its recapitalisation plan.

However, a week after the UB-Diageo deal was announced, ailing Kingfisher has reached out to its lenders with a request for some more time to finalise a revival plan.

In a meeting with the consortium of bankers on Friday, Kingfisher Airlines' senior management sought a week's time to submit a turnaround plan. If the bankers are not happy with the revival plan they may invoke their Rs 8,000 crore guarantee to the airline.

Meanwhile, the promoter holdings in UB firms have declined at a time when the group is said to be in talks to raise funds through options including sale of shares in companies including Kingfisher and United Spirits.

While the promoter holding at USL remained unchanged during the last quarter at 27.78 percent, the same in Kingfisher dipped marginally from 35.86 per cent to 35.83 percent, shows the stock exchange data.

Currently, the promoter holding in Kingfisher is led by UBHL, Kingfisher Finvest and Mallya.

At Kingfisher, promoters have pledged 90.11 percent of their shares, while the level of pledging of promoter shares is 97.95 percent at USL, 96.97 percent at UB Engineering and 88.67 per cent in Mangalore Chemicals & Fertilisers.

The immediate hurdle, however, is Kingfisher's operational licence, which is currently suspended and expires on 31 December, unless the government extends it.