SME Times is powered by   
Search News
Just in:   • Order for release on interim bail unworkable: Subrata Roy to SC  • Sensex surges over 200 points during pre-noon trade  • TCS net up 38 pc for fiscal 2013-14  • Asia's largest Houseware, Textile Fair to open on Sunday  • Audi India announces price hike effective from May 1 
Last updated: 10 Oct, 2012  

Air.India.9.Thmb.jpg Govt approves sovereign guarantee for Air India bonds

Air.India.9.jpg
   Top Stories
» Rupee falls to 60.50 against dollar on oil demands
» Poor quality may cost exporters key global markets: Kher
» Need to help SMEs to create more jobs, increase exports: Maira
» Import tariff value on gold, silver increased
» Amend existing Land Acquisition Act: DIPP
SME Times News Bureau | 10 Oct, 2012
National carrier Air India Tuesday said the government has provided sovereign backing to its non-convertible debentures (NCD) worth Rs.7,400 crore.

According to the airline, the finance ministry has approved the sovereign backing for the NCD, whose proceeds will be used to repay short-term working capital loans from a consortium of 19 banks.

"The NCD will have a tenure of 19 years and priced at a spread over the applicable government security. The government has capped the spread at 70 basis points," the airline said in a statement.

The airline will be able to save on the interest cost of about Rs.900 crore per annum by repaying the short-term loans.

"The banks will now have a reduced exposure to Air India after the said short-term loan is paid out by the airline," the statement said.

The airline further said it would issue the NCDs within two-three weeks from the date of the government's guarantee receipt.

The airline is expected to tap provident, pension funds, financial institutions, employee provident fund organisation (EPFO) and other sources to sell the NCDs.

The move was proposed in the airline's turnaround (TAP) and financial restructuring plans (FRP) which was approved by the cabinet.

Air India had borrowed some Rs.21,412 crore towards acquisition of new aircraft, another Rs.22,368 crore towards working capital and owes around Rs.2,000 crore to oil retailers, besides facing accumulated losses worth Rs.22,000 crore.

Under the financial restructuring out of Rs.18,000 crore taken by the airline from a consortium of 19 banks led by the State Bank of India (SBI), Rs.11,000 crore will be converted into long-term debt with a repayment period of 10-15 years.

The remaining Rs.7,400 crore will be repaid through government-guaranteed bonds.

Earlier, the government had announced an infusion of Rs.4,000 crore during the current fiscal to increase the airline's equity base to Rs.7,345 crore.



 
Print the Page Add to Favorite
 
Share this on :
 

Please comment on this story:
 
Subject :
Message:
(Maximum 1500 characters)  Characters left 1500
Your name:
 

 
  Customs Exchange Rates
Currency Import Export
US Dollar
61.75
60.75
UK Pound
102.45
100.20
Euro
85.65
83.65
Japanese Yen 60.55 59.10
As on 17 Apr, 2014
  Daily Poll
At present, industrial slowdown is the biggest challenge to growth
 Yes
 No
 Can't say
  Commented Stories
» The business of family business(6)
» Industry's revival, export momentum must for growth(5)
» Starting an import export business: Basic guide for beginners(3)
» MSME schemes - Do you know all of them?(3)
» MSME definition: Do we need a new one(2)
 
 
About Us  |   Advertise with Us  
  Useful Links  |   Terms and Conditions  |   Disclaimer  |   Contact Us  
Follow Us : Facebook Twitter