India Ratings and Research has revised the rating watch status of Mumbai International Airport Ltd’s bank facility to Rating Watch Evolving (RWE) from Rating Watch Negative.

The RWE indicates that the ratings may be affirmed, upgraded or downgraded

The RWE reflects the debt restructuring undertaken by MIAL ahead of its debt-servicing due date of September 30 and the impact of the same on its credit profile.

On September 29, the company submitted to its lenders a proposal to restructure its existing loans and working capital facilities, delineating the change in ownership clause under the Reserve Bank of India circular dated June 7, 2019.

MIAL has also applied to restructure its real estate deposit loan. The company has not paid its debt obligations due in September and October as the restructuring plan was submitted prior to the due dates. Ind-Ra will analyse the restructuring plan and its impact before taking any further rating action.

The rating firm in its report stated that it continues to factor in the support provided by MIAL to Navi Mumbai International Airport Private Limited (NMIAL) to arrive at the ratings. MIAL has undertaken to support NMIAL’s equity requirements and cost overruns, and agreed to provide a corporate guarantee for the replenishment of the latter’s debt service reserve account for four years from the commencement of operations.

MIAL’s financial profile was severely impaired by the outbreak of Covid-19, the resultant lockdown and the continued restrictions on airlines’ operations. The total passengers handled by the airport plummeted 91.9 per cent y-o-y to 1.86 million in 1HFY21.

In the absence of regulatory relaxations, the agency could have moved the ratings to a default category.

The GVK group, the existing promoters of MIAL, has agreed to work with the Adani Group to take over the debt availed by the former and thereafter, take the ownership of MIAL upon the receipt of approvals. This change in ownership, along with the approval of the restructuring plan will have a positive impact on MIAL’s ratings.

The management has informed that under the restructuring plan, MIAL has sought additional funded interest term loan for six months till March 31, 2021, extension of moratorium on the repayment of facilities till 31 March 31, 2022, extension of tenure and revised repayment schedule, consequent to the funded interest term loan and moratorium extensions and a reduction in interest rate for all facilities.

MIAL is a joint venture company held by a GVK group-led consortium, comprising GVK Airport Holdings Ltd (50.5 per cent stake), South Africa-based Bid Services Division (Mauritius) Ltd (13.5 per cent) and ACSA Global Ltd (10 per cent) and Airports Authority of India (26 per cent).

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