The government is considering issuing bonds to repay the debt of Air India.
Air India Privatization: The government is contemplating to raise more than 30 thousand crore rupees through bonds to repay the debt of Air India. This information has been given to the Economic Times by a person with knowledge of the matter. Tata Group has won the bid to buy Air India.
AIAHL to issue bonds
Air India Asset Holdings Limited (AIAHL) will issue the bonds. AIAHL has been created to take over the airline’s debt of about Rs 75,000 crore and assets of Rs 17,000 crore. A person on condition of anonymity told ET that monetization of assets and the proceeds from the sale would help pay off a large part of Air India’s debt. But even after this, the government will have to pay more than 30 thousand crore rupees. He said that it will be raised through bonds.
The government’s move to sell the bonds to pay off the remaining debt of Air India can be taken at any time. It will also be seen that this does not hinder his financial position.
AIAHL has a debt of 30 thousand crores
AIAHL already has a debt of 30 thousand crores of Air India and before transfer of Air India to Tata Group, it will be further transferred about 45 thousand crores of debt. This debt includes non-convertible debentures of about Rs 7,400 crore. The person said that the liability of about Rs 35,000 crore will be paid by the Tata group and the proceeds from the sale of the asset. He told ET that the rest will have to be paid and plans to do so by issuing bonds, which will be guaranteed by the government.
The Rs 18,000 crore offer made by the Tata Group for the airline includes an estimate of Rs 2,700 crore in cash and Rs 15,300 crore in debt. The deal also includes a 100 per cent stake in Air India and its rental arm Air India Express, along with a 50 per cent stake in its ground handling company AISATS.
The government plans to repay loans taken through banks by selling assets and issuing bonds. This mainly includes public sector banks, which gave funds on government guarantees. The government will also pay the dues of oil companies, airport operators and other vendors, which is about Rs 15,000 crore.
The government also plans to issue a letter of intent to the Tata Group to initiate the process of transferring the airline from salt to software business Tata Group.
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