Air India to raise 6,150 crore short-term loan
New Delhi: over-indebted Air India Limited plans to increase ₹6,150 crore through a short-term loan (STL) from domestic lenders by the end of the month, the airline said on Wednesday in a tender document.
The proceeds of the loan, which would be backed by a sovereign guarantee, would be used to refinance the foreign currency bridging loans taken out for the purchase of seven Boeing 787s and 777s.
The national carrier is also offering planes like the Boeing 787 and Boeing 777 as collateral for the loan, which will be repaid within a year.
According to the tender document, Air India will increase the total amount in seven installments, which would consist of three installments of ₹790 crore each, three slices of ₹925 crore each, and a slice of ₹1005 crores.
The interest rate payable by the national carrier will be linked to the “MCLR / GSEC rates with a reasonable spread as a margin”.
Marginal Cost of Funds Based Lending Rate or MCLR is an internal benchmark linked to the tenor, which means that the rate is determined internally by the bank based on the time remaining for the repayment of a loan. As a general rule, banks cannot lend at a rate lower than the MCLR of a particular maturity, for all loans linked to that benchmark.
A copy of the tender document has been reviewed by the Mint.
The government overhauled the ailing national carrier’s terms of sale last month, suspending the company’s previous offer and a fixed level of debt. Under the new offer, Air India will be offered on the basis of its enterprise value and bidders will be able to indicate the level of debt they are comfortable with.
Air India has short-term liabilities and provisions including short-term borrowings and trade payables of ₹70,686.6 crores and a net debt of ₹58, 255 crore at the end of fiscal 19. However, the government transferred ₹29,464 crores of this Air India debt to a government-owned special purpose vehicle called Air India Assets Holding Company Limited (AIAHL).
The government, however, rejected the national carrier’s request for an injection of equity capital, agreeing instead to act as sovereign guarantor of the airline’s debt.
So far, Air India has received an equity injection of ₹30,520.21 crore to date from the government since fiscal year 2011-12, which includes financial support and cash support.
Never miss a story! Stay connected and informed with Mint. Download our app now !!