NACIL and AICL to float bonds for Rs. 795 crore

Bangalore: The National Aviation Company of India Ltd. (NACIL) and its subsidiary, Air India Chartered (AICL), are to issue two separate non-convertible debentures (NCDs) amounting to Rs. 795 crore, NACIL sources told The Hindu.
The issues are the first public sector bonds to be backed by an explicit sovereign guarantee by the Union Government in two decades. The proceeds will be used to pay for 15 per cent of the total cost of $1.2 billion for acquiring 10 new aircraft from Boeing and an engine from General Electric. The remaining 85 per cent was earlier financed by JP Morgan, which was guaranteed by the U.S. Exim Bank.
While NACIL is to issue bonds for Rs. 700 crore, AICL is raising Rs. 95 crore. This will be the first ever bond issue by the two entities. While NACIL ordered three B777-200s, four B777-300 ERs and one GE90 engine, AICL ordered three B737-800 aircraft. The orders were approved by the boards of the two companies in May 2009.
The rupee-denominated bond issues with a 10-year tenure have been “arranged” by Standard Chartered Bank, sources said.
Sovereign guarantee implies that the Union Government will stand guarantee in case the two corporate entities default in their repayments. The issues have a “bullet repayment at the end of 10 years,” the sources said.
24/03/10 V Sridhar/The Hindu

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Categories: NACIL Mar 2010