Mallya may dilute 15% stake in merged airline

Liquor baron Vijay Mallya could end up diluting 15-20 per cent of his 76 per cent holding in the merged airline as a result of Deccan Aviation’s proposal to raise Rs 1,600 crore and expand authorised capital by Rs 350 crore, said airline experts.

Mallya is trying to raise Rs 1,600 crore for its airlines business through Deccan Aviation, the listed company into which he plans to merge Kingfisher Airlines. Deccan has called for an EGM on March 18. Deccan also plans to expand its authorised capital from Rs 150 crore to Rs 500 crore by adding 25 crore shares of Rs 10 each and one crore preference shares of Rs 100 each.

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The Economic Times article.

Deccan, Kingfisher to merge in 3:7 ratio

The Deccan Aviation board, at a meeting held today, appointed April 1, 2008 as the date for merger with Kingfisher Airlines.Subsequently, Deccan Aviation will be known as Kingfisher Airlines.

"Deccan Aviation shall allot shares in the ratio of three fully paid equity shares of face value Rs 10 each for seven equity shares of Rs 10 each held in Kingfisher Airlines," Deccan's release to the Bombay Stock Exchange said today.

The share entitlement ratio has been determined based on the recommendation of independent valuers KPMG India and Dalal & Shah.Deccan's charter business would be sold to an entity to be jointly owned by Captain Gopinath and the UB Group, the release added.

UB group ups stake in Deccan Aviation by 3%

UB group has increased its stake in low-cost airline firm Deccan Aviation by almost 3% through market purchases, stock exchange data showed on Wednesday.UB group firm Kingfisher Radio, that runs Kighfisher Airlines, purchased a total of four million shares (2.95%) on Wednesday on BSE and NSE combined at Rs 275 each.Most of the shares were purchased from Money Matters Advisory and Money Matters (India), according to the BSE and NSE data.

With these purchases, Kingfisher Radio and other group companies of UB group have increased their stake to almost 49%.In September, UB group had made an open offer to the shareholders of Deccan Aviation at Rs 155 a share for a 20% stake.Last week, Deccan Aviation had announced it would merge the airline operations of Kighfisher Airlines with it.

UBS, ICICI offload Deccan Aviation stake

UBS Securities, ICICI Ventures and ICICI Bank today sold a part of their shareholding in Deccan Aviation, owner of the low-cost Air Deccan airline.In a series of bulk deals, Money Matters bought all the shares sold by the three entities for nearly Rs 102 crore.

While UBS Securities sold 1.79 per cent stake, ICICI Ventures offloaded 2.31 per cent stake. ICICI Ventures holds shares in Air Deccan through Western India Trustees and Executor Company. ICICI Bank sold 0.91 per cent stake.Prior to the sell-of ICICI Ventures held 6.78 per cent stake, UBS had 2.53 per cent and ICICI Bank 1.05 per cent.

ICICI Bank and UBS sold the Deccan shares at Rs 150 each, and ICICI Ventures sold the shares at Rs 149.96 each.ICICI got Rs 46.9 crore from the sale, UBS got Rs 36.5 crore and ICICI Bank Rs 18.6 crore.

The sale has happened at a time when Vijay Mallya’s UB Group is scaling up its shareholding in Deccan Aviation through a 20 per cent open offer. Priced at Rs 155 a share, the offer was triggered with the Kingfisher group acquiring a 26 per cent stake in the airline. The offer will close on October 1.

UB starts talks with FIs to fund Deccan take over

Vijay Mallya-promoted UB Group, which has acquired 26 per cent stake in Air Deccan for Rs550 crore and is to buy another 20 per cent through an open offer, has initiated talks with financial institutions to fund the takeover.

UB Holdings has only four weeks time to tie up funds and the process of talks with financial institutions have begun, said UB Group Chief Financial Officer Ravi Nedungadi.

Last week, Mallya's UB Group paid an advance of Rs 150 crore toward the 26 per cent stake -- which would be through an issue of 96,77,419 fully paid-up equity shares.

The remaining amount would be paid to Air Deccan's promoter Deccan Aviation Ltd in the coming four weeks. The transaction had valued Air Deccan at Rs 155 a share.

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Kingfisher-Deccan eye Rs 300cr savings-Video

Kingfisher Airlines and Deccan Aviation will save Rs 300 crore in the first full year of operation by working together, Vijay Mallya chairman of the UB Group, said at a press conference here today.

The savings would come from a common sharing of engineering services, spares, employees, pilots, other crew, and ground-handling facilities.

The combined revenue of Kingfisher and Air Deccan airlines in FY07-08 is estimated at Rs 6,000 crore. Mallya said, “We will soon see a net profit in Deccan Aviation. Together, the two airlines account for 50 % of the deployed capacity of south India. Mallya said Kingfisher was expected to make an operational profit in FY08 and net profit in FY09.

For the time being, the two airlines will continue to be run independently, but would work out an optimal route strategy, wherever possible.

Deccan Aviation will continue to be run as a low-cost carrier. Mallya, however, said there was no immediate plans to raise fares though he added that consumers could not hope to get fares at levels where the airlines were making a loss. However, the combined entity can offer competitive air fares owing to cost savings of Rs 300 crore.

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Shares of Deccan, UB Holding soar 10 pc on BSE

Shares of both Deccan Aviation and UB Holdings today surged nearly 10 per cent in early morning trade on the Bombay Stock Exchange after Vijay Mallya's UB Group acquired 26 per cent in the low-cost carrier for Rs 550 crore.

The scrip of Deccan Aviation jumped Rs 13.80 to touch a high of Rs 160 on the Bombay Stock Exchange (BSE) and over 17.24 lakh shares exchanged hands on the bourse. The shares opened firm at Rs 151 in the morning, surged 9.43 per cent, and were trading at Rs 151.55, up 3.66 per cent on the BSE at 11.12 am.

Scrip of United Breweries Holdings on the other hand jumped Rs 68.35 or 9.99 per cent and touched a high of Rs 752.15 with over 1.68 lakh shares being traded on the bourse. United Breweries Holdings was last trading at Rs 726.25, up 6.54 per cent on the BSE.

Read more in The Economic Times article.