Monday, December 07, 2020

Air India to raise Rs 1,000 crore this week: Report

Air India will raise close to Rs 1,000 crore in the coming week as part of its fundraising drive of Rs 6,150 crore in short-term loans from lenders, according to a report by Mint quoting sources. 

The carrier will use this debt to refinance its more expensive foreign currency loans which it took to buy Boeing 787 and 777 jetliners, two people in the know told the publication.

"The airline has completed raising six of the seven tranches, with the last remaining tranche expected to be completed in the coming week," one of the people cited above s quoted in the report. These new loans will have a sovereign guarantee, as per the report.

The airline planned to raise Rs 6,150 crore in seven tranches, which were broken down to three tranches of Rs 790 crore each, three tranches of Rs 925 crore each, and one tranche of Rs 1,005 crore, according to Air India’s bid document. According to the source quoted by the publication, this was done to “retire high-cost debt". The domestic carrier, buckling under debt, is using its other Boeings and other planes as collateral for these loans to be repaid in 12 months.

The development comes at a time when the carrier is struggling with the impact of the Covid-19 pandemic, which has devastated the global airline industry. The government is seeking to sell 100 per cent of its stake in the state-owned national airline, including Air India's 100 per cent shareholding in AI Express and 50 per cent in Air India SATS Airport Services.

To get credible bidders faster, the government changed its approach with the Air India stake sale. The company will now be sold at enterprise value and those interested in bidding can buy the level of debt they are comfortable with. This replaced the current condition of the buyer taking over more than a third of the debt and transferring the rest to a special purpose vehicle.

As per the Air India EoI floated by DIPAM, of the airline's total debt of Rs 60,074 crore as of March 31, 2019, the buyer would be required to absorb Rs 23,286.5 crore, while the rest would be transferred to Air India Assets Holding, a special purpos vehicle.

07/12/20 Deccan Herald

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