Air India is reportedly seeking to repay its airline debt to six Boeing 787 Dreamliners and one Boeing 777.
Air India raises Rs 6,150 crore in short-term loans to refinance foreign currency bridge loans taken out to purchase seven Boeing 787s and 777s. Air India is seeking to repay its aircraft debt to six Boeing 787 Dreamliners and one Boeing 777, reported Aviators Buzz.
Air India has launched a tender document for the same which indicates that the proceeds of the loan, which would be backed by a sovereign guarantee, would be used to refinance foreign currency bridge loans taken out to buy seven Boeing 787s and 777s. It also offers planes such as Boeing 787 and 777 as collateral for the loan, which will be repaid within a year, according to the report.
Air India will raise the total amount in seven tranches, which would consist of three tranches of Rs 790 crore each, three tranches of Rs 925 crore each and one tranche of Rs 1,005 crore, according to the tender document.
According to a report by Indian Express, the government will guarantee these loans.
The interest rate payable by the national carrier will be linked to “MCLR/GSEC rates with a reasonable spread as a margin”. The incremental cost of funds-based lending rate or MCLR is an internal tenor-related benchmark. It is determined by the bank according to the time remaining for the repayment of a loan. Generally, banks cannot lend at a rate lower than the MCLR of a particular maturity for all loans linked to that benchmark.
It also comes days after the Union government revised bids for the sale of the nationalized airline. Civil Aviation Minister Hardeep Singh Puri last week said the tender for Air India would be on the basis of its enterprise value instead of equity value and extended the date submission deadline from December 14 to October 30.
The enterprise value of a business includes the value of equity, debt as well as cash flow of the business. Equity value measures the value of a company’s shares.
“We have decided to ask for offers for Air India on enterprise value,” the minister said at a press conference last Thursday.