AI Assets raises₹7,000 cr via bond sale
DURING THE NEXT 10-15 DAYS, AIR INDIA ASSETS HOLDING WILL RAISE ₹15,000 CR THROUGH ANOTHER BOND ISSUE
NEWDELHI: Air India Assets Holding Ltd (AIAHL), a special purpose vehicle created by the government to park a part of the national carrier’s debt, has raised ₹7,000 crore through a bond sale to refinance its debt, two people with direct knowledge of the matter said.
“The bond issue of Air India Assets Holding Ltd with a threeyear tenure of ₹1,000 crore (and) with a greenshoe option of ₹6,000 crore has been fully subscribed at 6.99%,” one of the two people said, requesting anonymity. A greenshoe clause gives the underwriter the option to sell more securities than initially planned if there was demand. “The company received bids worth ₹20,830 crore, which is the highest in the yield-based bond market in the history of the BSE. The company has decided to accept the entire issue of ₹7,000 crore,” the person added.
Air India’s net debt swelled from about ₹55,000 crore at the end of March 2018 to ₹58,351.93 crore at the end of March 2019. It includes working capital and aircraft-related debt. AIAHL will raise about ₹29,000 crore through bond sales in September, said the second person on condition of anonymity.
“During the next 10-15 days, Air India Assets Holding will raise ₹15,000 crore through another bond issue. This will be followed by yet another bond issue of ₹7,400 crore, the proceeds of which will be utilized for novation of NCDS (non-convertible debenture) secured earlier by the airline,” the second person said. Novation is the act of substituting a valid existing contract with a replacement contract, where all concerned parties mutually agree to make the switch.
The rupee-denominated bond issue, and the subsequent repayment of the working capital debt, will nearly halve the interest servicing outgo for Air India from ₹4,500-5,000 crore a year to about ₹2,700 crore a year, said the second person.
Mint had on August 28 reported that Air India Assets Holding is expected to repay ₹22,000 crore of its ₹29,464 crore working capital debt in September. Meanwhile, Air India’s loss widened to ₹8,400 crore in the year ended 31 March from ₹5,337 crore in the previous year, because of higher operating costs and foreign exchange losses. The national carrier’s total revenue in 2018-19 stood at around ₹26,400 crore.
Air India, which has about 128 aircraft, began operations on 13 new domestic and six international routes in the last fiscal year.
The cash-strapped airline, which is surviving on government bailout, has so far received an equity infusion of ₹30,520.21 crore from the Centre, as part of a 2012 turnaround plan.