Mumbai: Cash-strapped Kingfisher Airlines on Tuesday said it has allotted equity shares against optionally convertible debentures (OCDs), a development that will help in saving interest outflow on such instruments.

In a filing to the BSE, Kingfisher said, it has issued 7.98 crore equity shares to three entities -- LKP Securities Ltd, Redect Consultancy and Star Investments -- at a price of Rs 25.01 per share, in lieu of conversion of debentures.
In January last year, Kingfisher had allotted over 7 crore optionally convertible debentures (OCDs), having an interest rate of 8 per cent, to the three entities.
"Post allotment, the paid up equity share capital of the company stands increased to Rs 577 crore from Rs 497 crore," the company said in the filing.
The conversion of OCDs to equity shares will help Kingfisher reduce its debt burden as it will save on the 8 per cent interest cost.
Kingfisher, which suffered a loss of Rs 1,027 crore in 2010-11 and has a debt of Rs 7,057.08 crore, posted a Rs 444 crore loss in third quarter this fiscal.
As per the terms of the OCD issue, the holder had the option to convert the instrument into equity shares within 18 months from the date of issue. The 18 months ending July 2,
2012.
Shares of the Kingfisher Airlines closed at Rs 26.80 per piece, up 0.75 per cent on the BSE.
Kingfisher further said that it is not contemplating any rights issue as was envisaged earlier.

A consortium of bankers, led by State Bank of India, is working on a second round of debt restructuring for the debt-laden airline. Kingfisher has sought around Rs 300 crore to meet its working capital needs.

Trouble had started in Kolkata last Friday when the airline announced it would stop operations for four days, leading the employees at the airport to demand their salaries and finally staging a walkout, leaving passengers in the lurch.
 Further, more than 20 flights were cancelled on Tuesday. About 80 flights of the carrier from six metro cities did not operate yesterday leaving hundreds of passengers stranded.
The airlines has been rapped by DGCA for not adhering to its flight schedules but the aviation regulator made it clear there were no plans to take any punitive action against it for the moment.
The airline began cancelling its flights as it held talks with bankers to finalise a deal for funds.
The airline had sought permission to operate around 400 flights with 64 aircraft during the current Winter Schedule from November to March.

(Agencies)