Private carrier Kingfisher Airlines on Thursday said its Board has approved converting lenders’ debt of up to Rs 1,355-crore into share capital.

The airline’s Board also approved converting promoters’ debt of up to Rs 648 crore into share capital, the Vijay Mallya-led carrier said in a press release here.

“The Board of Directors of the company, at its meeting on November 25, approved a debt recast package (DRP) with lending banks, following a one-time relaxation in restructuring guidelines sanctioned by the Reserve Bank of India,” the airline said.

To make the package effective, the Board has also resolved to issue and allot shares to lenders, UB Holdings and Star Investment, among others.

The issuance and allotment of these shares, however, is subject to mandatory approvals, it said.

The package approved by the Board includes re-schedulement of repayment of the balance debt to lenders over nine years with a moratorium of two years.

Besides, a reduction in interest rates and sanction of additional fund and non-fund based facilities by the lenders have also received the Board’s nod, it said.

While Board sanction has been received from several lenders, the same is shortly expected from others, the airline said, adding the DRP is subject to execution of necessary documentation.

The airline’s debt currently stands at over Rs 6,000 crore.

Kingfisher Airlines will issue and allot up to 135,50,00,000 shares to lenders and another 65,77,00,000 shares to United Breweries Holdings, the release said.

Besides, the company would also issue and allot up to 2-crore debentures to Star Investments Ltd, 3-crore debentures to Margosa Consultancy Pvt Ltd and 3-crore debentures to the Redect Consultancy Pvt Ltd of Rs 100 each, the release said.

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