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ICICI breaks ranks with Kingfisher Airline lenders

MUMBAI: ICICI Bank, one of Kingfisher’s lenders which also has a charge on promoter Vijay Mallya’s liquor company shares, has asked the airline to provide additional securities or pay up following a sharp drop in the value of its shares. The notice comes at a time when shares of the airline fell 6% to a new low of Rs 16.75 on Monday.

The private bank appears to have broken ranks with other members of the consortium as an SBI official said that there was no consortium decision to ask the airline to repay. “The consortium is like a coalition government although decisions are jointly taken, there is nothing stopping an individual bank from acting on its own,” said a top banker. Compared to other lenders, ICICI Bank appears to have an upper hand as the lender has shares of Mallya’s liquor business pledged against securities for another loan. According to banking sources, cash flow into some of the accounts over which lenders had a charge had dried up after derecognition by the International Air Transport Association. “We would like to clarify that following the recent decline in the share prices of Kingfisher Airlines, ICICI Bank has, as a matter of routine, requested that security be topped up or that the loan amount be adjusted suitably. There is absolutely no recall of the entire loan facility nor any notice for sale of securities,” Kingfisher said in a statement.

“In case your news report on this subject alludes to the purported intent (which is not the case) of ICICI Bank to offload any shares, this may cause speculative dealing/price manipulation which is entirely avoidable,” the statement added.

In response to a parliamentary query, the government disclosed that 13 public sector banks, including SBI, have a Rs 5,608 crore exposure to the airline. The statement added that SBI, which has a Rs 1,400 crore exposure, has not extended any lifeline to the airline this year.

On Monday shares fell as Kingfisher Airlines grounded flights operations to and from Lucknow on Monday, leaving hundreds of passengers in a lurch. On Sunday, it closed down its Goa office. Lucknow airport authorities confirmed that the airline has suspended its operations “till further orders”. The airline has been operating two flights each to Mumbai and Delhi from Lucknow on a daily basis. Airports Authority of India officials said that the airline has been barred from using the Lucknow airport till it clears its dues. For the past one week, the airline has been using the “cash-and-carry” method to use the airport.

 

 

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Posted by on Mar 27 2012. Filed under Business India News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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