Deccan Aviation offers 26 pc equity to UB Group

Bangalore, May 31 (UNI) Putting at rest the suspense over Kingfisher Airlines acquiring low cost carrier Air Deccan, Deccan Aviation today approved the offer of the UB group of liquor baron Vijay Mallya to take a 26 per cent stake in its no-frills airline with an investment of Rs 550 crore.

The Board of Deccan Aviation, the parent company of Air Deccan, which met here this evening, approved an allotment of over 35 million preferential shares at Rs 155 per share, making the UB Group the single largest equity holder of the company.

Air Deccan Managing Director Capt G R Gopinath, who had been continuously denying efforts by Kingfisher Airline to acquire stakes in the low cost airline told newsmen after the board meeting ''I mistook Dr Mallya earlier and it made sense after I heard his arguments, which were in the interest of both the companies''.

UB had already placed Rs 150 crore with Air Deccan and the balance would be paid before June end, Capt Gopinath said.

Investment consultant Edelweiss had been working on the plans of Air Deccan to raise additional capital and the UB Group's proposal was accepted. There were five other offers, Capt Gopinath said, but declined to name them.

He said, ''UB was preferred over other interested investors, due to the inherent synergies existing in Air Deccan and UB-owned Kingfisher Airlines''.

He also announced a structural change in the top management with Capt Gopinath taking over as executive Chairman and Dr Mallya appointed Deputy Chairman.

Capt Gopinath said there was no sale of individual shares.

He said both the airlines have eight operational holdings with a world class infrastructure facility at Chennai which would open next month. The new alignment would provide a seamless connection across the country without losing the identity of the business model.

To a question whether Dr Mallya had taken over the company he said ''we behold each other.'' Capt Gopinath said a coordination team would be appointed soon to improve the operational exchanges.

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UNI