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Banks, owed around Rs.7,000 crore (US $1.16 billion) by the UB Group-promoted Kingfisher Airlines Ltd, have started the process of selling the Kingfisher brand in an attempt to cut their losses.
The airline, promoted by flamboyant billionaire Vijay Mallya, has been grounded since October 2012.
Mint couldn’t immediately ascertain the impact of an impending sale on the beer brand “Kingfisher” owned by United Breweries Ltd, also controlled by Mallya.
SBICAP Trustee Co. Ltd (STCL), a wholly owned subsidiary of SBI Capital Markets Ltd, has floated a so-called expression of interest (EoI) from parties who wish to indicate their interest to acquire the trademarks pertaining to grounded Kingfisher Airlines.
The airline gave the “Kingfisher” brand as collateral to bankers. The Kingfisher brand was valued at Rs.3,000 crore (US $501 million) by audit firm Grant Thornton India some five years ago.
“SBICAP Trustee Co. invites EoI from parties who wish to indicate their interest to acquire the trademarks pertaining to Kingfisher Airlines on “as is where is” and “as is what is” basis. The interested parties may submit the EoI with indicative purchase price/s,” SBICAP said in its website.
“The submitted EoI shall be considered solely for determining estimated market value of the trademarks and to determine interest of prospective buyers to acquire the subject trademarks,” the EoI document said.
The list of trademarks offered include “fly kingfisher” (label), “fly kingfisher”, “flying models”, “fly the good times”, “funliner”, “kingfisher” and “flying bird device”.
Kingfisher Airlines’ s operating licence was suspended in October 2012 by aviation regulator Directorate General of Civil Aviation (DGCA) following a strike by the airline’s employees. The permit has since expired, although it can be renewed within two years.
A group of 14 lenders led by State Bank of India (SBI) expects to recover at least Rs.1,000 crore (US $161 million) as it starts taking possession of buildings, helicopters and other fixed assets of the grounded airline. The consortium collected Rs.550-600 crore (US $92-100 million) in the first phase by selling pledged shares of associate companies of Kingfisher Airlines’s parent UB Group.
On 14 February 2013, United Breweries, the parent company of Kingfisher Airlines, said that it fully owns the Kingfisher brand that is registered by the company under trademark classes pertaining to alcoholic beverages and that this hasn’t been hypothecated or pledged to any lender to secure loans, contradicting the contention of creditors to the airline that’s part of the UB group.
A senior UB Group executive said the beer and airline brands were “different” and they are covered under different categories. “UB Group has not pledged the beer brand for loans to Kingfisher Airlines,” he added.
A Kingfisher Airlines spokesperson did not offer any comment on the issue.
Meanwhile, Kingfisher Airlines’s loss widened to Rs.822.42 crore in the three months ended 31 December compared with a loss of Rs.755.17 crore in the year-ago period.
With planes remaining on the ground, the airline had no sales in the reporting quarter, mirroring the zero sales a year ago.
The Mumbai-based airline had accumulated losses of Rs.16,023.46 crore (US $137 million) on 31 March 2013 and its net worth was a negative Rs.12,919.82 crore (US $2.16 billion).
Kingfisher Airlines, launched in 2005, has never made a profit.