Mumbai airport headed for debt restructuring
Lenders may take Mumbai International Airports (MIAL), a Gvk-group entity, for debt restructuring under the RBI’S special window for Covid-19 impacted sectors and companies. A senior executive, with a private bank, said because of the pandemic, MIAL needs restructuring.
“It will have to wait for the recommendations of the Kamath panel. Then lenders will take a call on restructuring. The airport is one such business that needs restructuring,” the executive said.
MIAL has already availed moratorium on repayments under the RBI’S regulatory measures. The RBI has formed a panel under the chairmanship of K V Kamath to advise on debt-restructuring of corporate borrowers facing stress because of the pandemic. The panel is expected to suggest industry-specific parameters to ensure genuine cases come up and get prompt support.
Total bank loan facility rated amounted to ~9,781.7 crore, according to CRISIL. In 2017, the airport infra firm had also restructured its loans worth over ~10,600 crore.
A senior public sector official said that the two income streams of airports — space rented out and sale at retail outlets — have been affected and it would take a long time to see any improvement. The reworking of payments (by borrower) may be one option.
Earlier this month, rating agency CRISIL had downgraded its rating on ~350-crore term loans against real estate deposits of MIAL to 'C' from 'B'.
CRISIL also downgraded the ratings on the remaining bank loan facilities, including project loans. The ratings continue to be on 'Rating Watch with Negative Implications'.
The downgrade in ratings on project and airport development fund (ADF) loans reflects low visibility in cash flows against debt servicing requirement in the near term. Liquidity challenges have increased on account of limited accrual generation due to curtailed airport operations.
Also, there are uncertainties around usage of cash balance in escrow account due to the pending judgment in Delhi HC regarding payment of annual concession fee to Airports Authority of India.
MIAL has upcoming debt servicing obligations of around ~65 crore on project loans within September 2020. Also, there is a limited visibility on treatment of accrued interest of around ~147 crore for period of moratorium from March to August 2020.