Hong Kong's SC Lowy may put $280 mn in Kingfisher Airlines

NEW DELHI: Hong Kong's SC Lowy, which specialises in buying into illiquid assets and creating liquidity for them, is in talks with Kingfisher Airlines and may invest about $280 million to help turn around the company, a person close to the situation said.

Lowy and Kingfisher have been in talks for some time and a deal may happen by the end of the month, the person added. "We are in discussions with SC Lowy and others. We cannot comment further at this time," a Kingfisher spokesperson said in an emailed reply.

SC Lowy Chief Operating Officer Chetan Baxi, however, declined comment on the development. "We do not want to comment on it," Baxi said when told about Kingfisher's confirmation to ETon the ongoing talks.

The Vijay Mallya-promoted airline has run out of cash due to rising costs and a fierce price war in the market, forcing it to borrow from banks and add to its debt pile of over Rs 7,000 crore. The airline is talking to banks for more money and has sought the government's help to pay creditors, some of whom are threatening to repossess aircraft.

It has not paid some of its pilots for over two months, and 21 of its 60 aircraft are grounded due to dispute with lessors. A deal with SC Lowy could be alifeline for the airline, helping it pay down some debt, meet statutory obligations and run operations for some months.

“As of now, no bank will lend any more till there is some serious re-structuring through some third party picking up a significant stake,” a senior official of a state-run bank said. Kapil Arora, Ernst & Young partner (infrastructure), said, "Arriving at a valuation acceptable to the buyer and the seller at this time when airlines are desperate to access funds will be a contentious issue, given the Indian carriers' financial health."