Air India invites merchant bankers to raise $1 b

PTI Mumbai | Updated on November 15, 2017 Published on April 15, 2012

A file photo of Air India flight. Air India is also open to any innovative structured financing package which reduces the financing cost.

Two days after the Government okayed a turnaround plan, cash-strapped national carrier Air India has invited merchant bankers to raise working capital loans up to $1 billion from overseas markets.

The move follows the Government allowing Air India to borrow up to $1 billion annually through the external commercial borrowing (ECB) route.

The airline has floated an “invitation of offers” for raising funds through the ECB route. It is seeking to raise the funds for at least one-year period at either a fixed or floating rate, according to the offer document.

Air India is also open to any innovative structured financing package which reduces the financing cost, the document says.

Last Thursday, the Government had approved the much-awaited turnaround plan and a financial restructuring plan that involves a Rs 30,000-crore equity infusion by the Government over the next eight-year period and a debt recast (CDR) of Rs 21,200 crore.

The financial restructuring plan will provide relief to Air India from its debt servicing obligations on working capital loans in the form of a substantial reduction in interest outlays, while giving it the necessary time to improve its operational efficiency.

The airline’s current outgo on interest payment to the banks is Rs 2,400 crore, which will come down drastically.

Air India had signed four agreements with the SBI-led 19 banks consortium on March 31 — the master restructuring agreement, the working capital facility agreement, the appointment of facility agent agreement and the appointment of trustee agreement, under the turnaround and CDR plans.

An important highlight is the conversion of about Rs 11,000 crore of working capital loans into long-term debts, which will lead to a saving of about Rs 1,000 crore this fiscal itself.

Besides, the airline will issue government-guaranteed non-convertible debentures (NCDs) worth Rs 7,400 crore to its lenders like financial institutions, banks, LIC and EPFO. The NCDs would be used to repay part of the airline’s close to Rs 21,200-crore working capital loans.

Air India has outstanding loans and dues worth Rs 67,520 crore.

Published on April 15, 2012
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