Over 50% of AI’s debt may be put in SPV
In an attempt to reduce the annual interest burden of Air India, the government has decided to transfer ₹29,000 crore of the ₹55,000 crore owed by the national carrier to a special purpose vehicle (SPV), civil aviation secretary RN Choubey said on Thursday.
Air India Asset Holding Ltd (AIAHL), as the SPV will be known, will either raise money to clear the debt directly or pay lenders monthly at different interest rates. To transfer the debt to the SPV, the government will need to secure permission from various creditors, which can be a lengthy process. To avoid that, the government is also weighing the option raising money and paying off the debt in one go.
“We are expected to take care of about ₹29,000 crore of debt so that Air India doesn’t have to worry about the interest on the debt . ... about ₹26,000 crore of debt will still remain with the airline, which they will have to manage. The SPV can raise money on the government’s guarantee. Air India will have to take clearance from lenders,” Choubey said.
Once the debt is transferred to the SPV, Air India’s annual interest liability will be around ₹1,700 crore per year, down from ₹4,400 crore currently.
The National Democratic Alliance (NDA) government’s attempt to privatise Air India failed this year when it found no takers for the airline. Choubey said the reason no bidder came forward was that the macroeconomic conditions were not conducive. The government has already made it clear that Air India will have to cut costs and increase revenue in return for financial support from the government. Air India chairman and managing director Pradeep Singh Kharola made a presentation before a group of minister and listed around a dozen areas for potential cost-cutting and revenue enhancement that could yield the airline yearly benefits of ₹2,000 crore.
On Tuesday, the government decided to sell off the national carrier’s ground handling arm Air India Air Transport Services Ltd (AIATSL).
NEW DELHI:
Vijay Mallya is willing to sign consent terms with the Indian government about paying his dues to creditors, the businessman’s lawyer told a special Prevention of Money Laundering Act (PMLA) court on Thursday.
The PMLA court began hearing a plea by the Enforcement Directorate (ED), which wants to declare Mallya a fugitive economic offender and confiscate his properties in India.
Mallya — who is currently in Londo — has so far neither appeared in court, nor submitted any undertaking indicating he would join the process of law in India, the ED’s counsel, DP Singh, told the court.
Mallya’s lawyer, Amit Desai, however argued that confiscating properties would not help authorities, as the properties would all end up in the consolidated funds of the government, and no one would have a claim over them.
“The rights of creditors would go. Further, all the proceedings before various forums and tribunals initiated by banks and the accused, over the rights to the properties, would also be infructuous,” said Desai, adding that the creditors and other interested parties would be made to “run pillar to post to claim their money ”.
ED’s counsel, Singh, however clarified that the centre only becomes an administrator of the assets, according to the rules of the Fugitive Economic Offenders’ Act, under which the ED wants to confiscate the properties.
But, Desai pointed out that the act doesn’t apply to Mallya. “The confiscation will be in retrospect. In general law, the properties of an accused are confiscated only after he is held guilty of the crime. Here, under this law, Mallya has not even been tried, not a single witness has been examined, and we are jumping to attach his properties,” Desai argued. “What if, tomorrow, Mallya is acquitted?”
MUMBAI: