AI plans to take `3,250cr loans for 'ur­gent' cap­i­tal needs

Financial Chronicle - - COMPANIES -

NA­TIONAL car­rier Air In­dia plans to take short-term loans of up to Rs 3,250 crore to meet "ur­gent work­ing cap­i­tal re­quire­ments", ac­cord­ing to a doc­u­ment. The dis­in­vest­ment-bound air­line, which is stay­ing afloat on tax­pay­ers' funds, ex­pects to get the cen­tral govern­ment's guar­an­tee for the pro­posed bor­row­ings shortly.

As part of ef­forts to re­vive the loss-mak­ing Air In­dia, a min­is­te­rial panel is work­ing on the modal­i­ties for strate­gic dis­in­vest­ment of the car­rier and its five sub­sidiaries.

Against this back­drop, the air­line seek­ing short­term loans as­sumes sig­nif­i­cance as it im­plies pos­si­ble funds crunch. In a ten­der doc­u­ment is­sued to­day, the car­rier said it is “look­ing for govern­ment guar­an­tee backed INR short-term loans to­talling up to Rs 3,250 crore in the first phase to meet its ur­gent work­ing cap­i­tal re­quire­ments by Septem­ber 25, 2017”.

The ten­ure of the loan will be one year and the amount is pro­posed to be drawn in two or three tranches.

A se­nior of­fi­cial said the air­line is al­ready fac­ing "cash deficit" and the loans will help in meet­ing im­me­di­ate cap­i­tal re­quire­ments. "The Govern­ment of In­dia guar­an­tee, which is ex­pected shortly, will be valid for a pe­riod of one year or till the date of dis­in­vest­ment," the doc­u­ment said.

Banks have been asked to sub­mit their fi­nan­cial bids by Septem­ber 19, in­di­cat­ing the amount of govern­ment-guar­an­teed short­term loans they are will­ing to of­fer.

Un­der a turnaround plan ap­proved by the pre­vi­ous UPA regime, Air In­dia is to re­ceive up to Rs 30,231 crore from the govern­ment sub­ject to meet­ing cer­tain per­for­mance thresh­olds. The 10-year bailout pack­age be­gan from 2012. So far, the em­bat­tled car­rier has re­ceived around Rs 26,000 crore un­der the pack­age.

The Cab­i­net Com­mit­tee on Eco­nomic Af­fairs (CCEA) gave its in-prin­ci­ple nod to the strate­gic dis­in­vest­ment of the air­line -- which has a debt bur­den of more than Rs 50,000 crore — in June this year.

Sub­se­quently, an Air In­dia-spe­cific al­ter­na­tive mech­a­nism was set up to guide the process. The min­is­te­rial group is look­ing into treat­ment of Air In­dia's un­sus­tain­able debt, hiv­ing off of cer­tain as­sets to a shell com­pany, de­merger and strate­gic dis­in­vest­ment of three profit-mak­ing sub­sidiaries, among other as­pects. Last month, the min­is­te­rial panel de­cided to ap­point trans­ac­tion ad­vi­sors for Air In­dia dis­in­vest­ment.

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