Kingfisher on verge of collapse

13/02/2013

Kingfisher Airlines is on the verge of collapse and it is anticipated that other businesses owned by Force India's Vijay Mallya could be used as collateral as banks seek recall of £1bn loan.

It is understood a number of banks, thought to number as many as 17, are putting increased pressure on Mallya to repay the £1.02bn loan claiming that he has already been "given enough time to repay".

The banks, which include the State Bank of India, are thought to have run out of faith with Kingfisher Airlines which now faces total collapse., shares having fallen by 5 percent in the last 24 hours.

"The banks have run out of patience," Shyamal Acharya, deputy managing director at the State Bank of India, told reporters. "Consortium members felt that the matter has reached a dead end. Here is a case maybe for the termination of the relationship. So we decided to consider recalling the loan."

The move could obligate Mallya to liquidate some of his other businesses, which include United Breweries Group, and even some of his personal assets indeed, it is claimed that the family home in Goa has already been collateralised.

In October 2011, Sahara India Pariwar, an Indian conglomerate which has interests in in finance, infrastructure & housing, media & entertainment, consumer merchandise retail venture, manufacturing and information technology, purchased 42.5% of Force India F1's shares for $100m.