AAI to raise Rs 1,200 cr for airport upgradation

Airports Authority of India (AAI) will borrow Rs 1,200 crore in the next four months to fund expansion and upgradation of airports across the country. A decision to this effect was finalised by the AAI board on Wednesday.
The move comes close on the heels of the Finance Ministry rejecting a proposal from AAI to raise Rs 5,500 crore through tax-free bonds.
The debt will be raised in several tranches. It is understood that ICICI Bank and Axis Bank will be part of the team of lead arrangers helping AAI raise debt. AK Capital will act as advisor for the borrowing plan. The funds are required for investment in expansion of Chennai, Kolkata and 35 non-metro airports.
AAI chairman VP Agarwal confirmed that the borrowing plan was cleared by the board, but did not divulge further details. The board meeting was attended by representatives of the civil aviation ministry and director general of civil aviation SNA Zaidi.
AAI might have to bear higher cost of funds now as compared to the earlier proposal of tax-free bonds. AAI has already been rated and there are no difficulties in raising debt, highly-placed civil aviation ministry sources said.
“This was the only option left since the Finance Ministry did not clear the tax-free bonds proposal,” they added. AK Capital was shortlisted last year to assist AAI in its borrowing plan, but the final decision got delayed since the authority was waiting for the finance ministry’s decision.
AAI had urged the Civil Aviation Ministry to allow borrowing through tax-free bonds, since the money was being invested in airport infrastructure. This facility was being allowed for other organisations dealing with infrastructure, was AAI’s argument.
19/11/09 Faizan Khan/Economic Times

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Categories: Airports Nov 2009