Kingfisher opts for Rs2000 crore rights issue

Mumbai: The board of Kingfisher Airlines approved raising Rs2,000 crore through a rights issue on Thursday. This follows a failed attempt by the airline to raise $350 million through global depository receipts.

The amount sought to be raised is substantially higher than its current market cap of Rs1,172 crore.

The financially-strapped airline, which has never come out of the red in all its years of operations, is seeking to restructure its debt.

Market observers see problems in the company successfully raising this amount as it will have to price its shares at Rs45 each, almost double Friday's closing price of Rs23 in order to raise the full amount.

The company had earlier, in January, offered optionally convertible debentures (OCDs). It is now in discussions with OCD holders to possibly participate in the proposed equity capitalisation.

The board has allowed the three entities that hold OCDs to pick up the unsubscribed portion of the rights issue.