Diageo deal could pull Kingfisher back
gained nearly 15 percent in three sessions since the United Spirits deal was announced on Nov. 9.
If Mallya is planning to use the liquor deal to rescue his airline, he will need to act quickly.
Kingfisher needs to raise or commit at least $1 billion by Nov. 30, according to the State Bank of India, the leader of a 17-bank consortium that has lent about $1.4 billion to the carrier. The consultancy Centre for Asia Pacific Aviation says Kingfisher's total debt is about $2.5 billion.
Kingfisher Airlines needs a significant cash infusion if it is to be revived, said Amber Dubey, head of aviation at KPMG. Diversion of some funds from the United Spirits deal may be a good first step.
However, he said the airline would need more funds to continue operations on a sustainable basis, he said.
Diageo agreed to buy a majority stake in United Spirits for $2.1 billion after months of talks, fuelling a push by the world's biggest spirits group into fast-growing markets.
United Spirits and Mallya's group company United Breweries Holdings will get about half of the sum. Sources said the bulk of this will be used to pare United Spirits' debt and release its shares, which were pledged by its founders to raise loans.
Mallya may infuse some of the proceeds into Kingfisher to pay staff salaries, airport fees and fuel bills to make it airworthy again, said investment banking sources and analysts.
A Kingfisher spokesman did not respond to a request for comments.
RETURN SOME MONEY
Mallya, known for his lavish
Be the first to comment.
