Thursday, June 01, 2017

Govt looks to rejig Air India debt to sweeten deal for buyer

New Delhi: Air India will rejig its debt before going under the hammer to make itself lucrative to a potential buyer.

This is the second attempt to restructure the government-owned airline’s debts. Officials said state-owned banks would soon start a fresh round of discussions with Air India on reducing its debt burden.

Of Air India’s Rs 46,570-crore debt, around Rs 16,000 crore is on account of aircraft loans, which were raised partially from EXIM Bank, foreign institutions and through non-convertible debentures. These loans are guaranteed by the government.

Sources said the aim was to restructure working capital loans in return for assets and land. Air India has been lent working capital by a consortium of 25 banks, led by the State Bank of India

“The carrier cannot be sold without restructuring its debt. Discussions between public sector banks and Air India will take place soon,” said a finance ministry official.
Civil Aviation Minister Ashok Gajapathi Raju said it could be difficult to find a buyer with that much debt. “We are exploring all options,” he said.

“Whatever decisions the banks take will be commercial ones. Whether that involves converting debt into equity or other ways is up to them.” the finance ministry official said
“There will be no pressure of any sort exerted on banks from the government to reach quick resolution. They will have to take business decisions,” the person added.
01/06/17 Arup Roychoudhury Sanjeeb Mukherhee & Arindam Majumder/Business Standard