Kingfisher Airlines caps FII holding to make room for investor

Kingfisher Airlines, in talks with various investors for equity infusion, has capped the FII investment limit at 3 per cent, a move to help facilitate foreign direct investment (FDI) into the carrier.

In a filing to the Bombay Stock Exchange (BSE), the debt-laden airline said: "With immediate effect no FII, qualified foreign investor or other non-strategic foreign investment (excluding investment by NRI) shall be permitted beyond its current level of three per cent or such other percentage that may be decided from time to time under intimation to the stock exchanges".

The Vijay Mallya-led carrier, which is currently grounded, on Thursday said it has imposed the FII cap with a "view to keep the company's capital structure in readiness for transactions that may be identified in the future for benefit of all stakeholders".

A resolution in this regard was passed at its board meeting held on December 12.

According to the filing, the Board of Directors of the company has been deliberating various alternatives to improve the financial position in the best interest of all stakeholders.

"In this connection, it has been advised that a fresh infusion of capital by a financial or strategic, Indian or non-resident investor is a possible alternative," it said.

Regarding the FII limit, Kingfisher Airlines said appropriate steps are being undertaken to intimate the Reserve Bank of India (RBI) and to seek consequent measures and any other approvals that may be considered necessary to give full effect to this decision.

On Tuesday, Kingfisher Airlines had said it was in "discussions with various investors, including Etihad Airways, for equity investments". The carrier's statement came in response to reports that it was to ink a deal for offloading 48 per cent stake.

"However, no agreement has been reached either with Etihad or any other airline and the matters are merely at negotiation stages," Kingfisher Airlines had said.

Coupled with tax arrears and vendor dues, the airline has over Rs 10,000 crore in accumulated losses, besides Rs 7,000 crore it owes to 17 banks, which the company has not serviced since January.

At the end of the September quarter, overseas investors held 2.46 per cent stake in Kingfisher Airlines. Foreign Direct Investment (FDI) in domestic carriers is currently capped at 49 per cent.

Extending its rally for the eighth consecutive day, shares of Kingfisher Airlines jumped 5 per cent to touch an upper circuit limit of Rs 17.27 on BSE.

With inputs from PTI