Kingfisher board approves debt recast plan for debt conversion

The board of private carrier Kingfisher Airlines' has approved a debt recast plan that would allow conversion of part of its debt into equity. The move is expected to help the company reduce its interest burden and stem losses.

Under the plan, Kingfisher will convert lenders' loans of up to Rs1,355 crore into shares. The plan will also help convert founders' debt of up to Rs648 crore into share capital.

The airline's balance loans would repaid to lenders over a nine year period including a moratorium of two years, it added.

The airline plans to issue convertible and redeemable shares to lending banks as also to founding entities in line with its debt recast plan.

The carrier plans to issue up to 57.5 crore redeemable preference shares and up to 78 crore convertible preference shares to its consortium of lenders. Also approved by the board is issue of  64.8 crore convertible preference shares to founding entities United Breweries (Holdings) and to Kingfisher Finvest India.

According to the airline with the debt restructuring package, lenders would also be able to sanction additional funds as well as non-fund-based facilities. The airline said the package firmed up with a one time relaxation in restructuring guidelines sanctioned by the Reserve Bank of India.