Centre to stand guarantee for Rs 5.5k-cr loan to Nacil

Mumbai: The Centre has agreed to guarantee a Rs 5,500-crore borrowing by the National Aviation Company of India (Nacil) for the purchase of 21 aircraft from Airbus.
A senior bank official said the government had issued the letter of guarantee last month. It may be recalled that the government-owned Nacil — the company created by the merger of Air India and Indian Airlines — has been looking at raising term loans from banks for over a year. However, banks had insisted on a government guarantee.
Bank officials said the government has agreed to guarantee repayment of interest and principal component of the loan. The loan has a 13-year tenure. For the first year, Nacil will have to pay only its interest liability. From the second year onwards, the flag carrier will start repaying the principal amount alongwith the interest.
The interest rate on the loan is linked to IDBI’s prime lending rate. This means that all other lenders in the consortium will benchmark interest rate on IDBI’s PLR. Sources said the interest rate is on a floating rate basis and around 150 basis points below the bank’s PLR, which is currently pegged at 12.75%.
IDBI was the lead bank which arranged the loan for the ailing airline company. IDBI and Punjab National Bank together had sanctioned around Rs 500 crore each while Canara Bank has agreed to lend approximately Rs 1,000 crore. Other lenders include Union Bank of India, Bank of Maharashtra, Central Bank of India and Allahabad Bank.
11/09/09 Sangita Mehta/Economic Times

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Categories: NACIL Sep 2009