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Business News/ Companies / News/  Air India buyer has to take on interest-bearing debt of Rs16,500 crore
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Air India buyer has to take on interest-bearing debt of Rs16,500 crore

As per the expression of interest, Air India's buyer has to take on debt of Rs33,392 crore, and the balance debt shall be allocated to govt-owned Air India Asset Holding

The government intends to sell a 76% stake in Air India along with a 100% stake in Air India Express and a 50% stake in Air India SATS Airport Services. Photo: Abhijit Bhatlekar/MintPremium
The government intends to sell a 76% stake in Air India along with a 100% stake in Air India Express and a 50% stake in Air India SATS Airport Services. Photo: Abhijit Bhatlekar/Mint

Mumbai: Bidders for a majority stake in Air India, which the government wants to divest, will have to eventually take over interest-bearing debt of around Rs16,500 crore, said a person with direct knowledge of the airline’s divestment.

The government had on 28 March invited expressions of interest (EoI) from parties interested in acquiring a controlling stake in Air India.

The government intends to sell a 76% stake in Air India along with a 100% stake in low-cost international airline Air India Express Ltd and a 50% stake in Air India SATS Airport Services Pvt. Ltd, a joint venture firm.

According to the EoI, the buyer of Air India will have to take on a debt of Rs33,392 crore (approximately $5.1 billion). The balance debt shall be allocated to Air India Asset Holding Ltd, which is 100% owned by the government.

“While the total debt being passed on to the new buyer stands at Rs33,392 crore, this headline number includes components such as current liabilities and financial lease. The current liabilities, which stand at Rs8,816 crore, have been incurred in normal course of business and then you have another component of Rs8,000 crore for financial lease of aircraft," said the person cited above, requesting anonymity as he is not authorized to speak with the media.

Financial lease can be terminated to get out of the liability and thus the actual interest-bearing debt a buyer will have to compulsorily honour comes down to around Rs16,500 crore, he said.

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ABOUT THE AUTHOR
Swaraj Singh Dhanjal
" Based in Mumbai, Swaraj Singh Dhanjal is responsible for Mint’s corporate news coverage. For the past eight years he has been writing on the biggest deals in private equity, venture capital, IPO market and corporate mergers and acquisitions. An engineer and an MBA, he started his journalism career in 2014 with Mint. "
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Published: 10 Apr 2018, 09:26 PM IST
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