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Air-India to raise money from foreign markets

The Air-India board has given its approval to raise substantial amounts, including nearly Rs 1 billion through private placement of bonds, through financial instruments in the international market.

This measure has been necessitated to meet the national carrier's aircraft loan repayment commitment and other financial obligations.

The board, which met in New Delhi, decided to go in for securitisation of Air India's receivables in the United States region to net around 200 million dollars.

The board also gave its nod for a wraparound loan facility which is being worked out with banks. This arrangement, Air India officials say, will be a benchmark in innovative financing in the international market.

The board gave its approval to the private placement of bonds for a five year tenure with bullet payments at the end.

It also agreed to go in for securitisation of the company's receivables in the US region with a seven year tenure and an average life of five years.

The company had been exploring various finance structures after exhausting all traditional avenues of getting loans. Besides, aircraft loan repayment, it requires money for operational costs and working capital.

An important reason for the difficulties faced by Air India is the depreciation of the rupee which has made imports dearer and increased the burden of insurance payments in the international markets.

UNI