New Delhi: The government is likely to transfer about Rs 20,000 crore of additional debt from Air India’s books in order to make it lucrative for buyers. The move will leave Air India with about Rs 10,000 crore of debt.
This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process. Potential bidders had expressed inability to take over the debt-laden airline.
As of March 31, Air India had a debt of Rs 58,351 crore.
While the Air India Alternative Special Mechanism (AIASM) headed by home minister Amit Shah is yet to take call on it, it has been proposed to the ministerial group that the move is necessary to make it attractive for buyers. Transaction advisor EY has pointed out high debt as one of the reason why investors didn’t show any interest to acquire the airline last year.
Further, the argument is that the yearly expenditure to run Air India is more expensive for the government than to pay annual interest on a debt of Rs 50,000 crore. The government has already invested Rs 30,000 crore under a bailout package extended by the previous UPA regime in 2012 for 10 years.
The government has already transferred Rs 29,500 crore of debt to the special purpose vehicle Air India Asset Holding Limited (AIAHL). In order to clear that debt, the SPV has already raised Rs 14,000 crore from bond market.
15/10/19 Arindam Majumder/Business Standard
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This is a third of Rs 33,992 crore debt that was to be passed on to the new owner during last year’s failed disinvestment process. Potential bidders had expressed inability to take over the debt-laden airline.
As of March 31, Air India had a debt of Rs 58,351 crore.
While the Air India Alternative Special Mechanism (AIASM) headed by home minister Amit Shah is yet to take call on it, it has been proposed to the ministerial group that the move is necessary to make it attractive for buyers. Transaction advisor EY has pointed out high debt as one of the reason why investors didn’t show any interest to acquire the airline last year.
Further, the argument is that the yearly expenditure to run Air India is more expensive for the government than to pay annual interest on a debt of Rs 50,000 crore. The government has already invested Rs 30,000 crore under a bailout package extended by the previous UPA regime in 2012 for 10 years.
The government has already transferred Rs 29,500 crore of debt to the special purpose vehicle Air India Asset Holding Limited (AIAHL). In order to clear that debt, the SPV has already raised Rs 14,000 crore from bond market.
15/10/19 Arindam Majumder/Business Standard
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