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FinMin nod for AI bond issue

BS Reporter  |  Mumbai 

Paving way for debt-restructuring of Air India, the Ministry of Finance has finally given an unconditional government guarantee to Air India’s Rs 7,400-crore non-convertible debenture (NCD) issue.

would be issuing the NCDs in two-three weeks from now, the airline said.

plans to issue NCDs valuing Rs 7,400 crore to replace its high-cost debt but the plan was stuck for six months, as the finance ministry had denied an unconditional government guarantee to the bond issue.

was forced to postpone the bond issue as the the finance ministry had only issued a conditional guarantee, which would be valid in case the airline fulfils specified operational and financial parameters.

The proceeds of the NCD would be used to repay the short-term working capital availed by Air India from the 19 banks, the airline said in a press statement.

The move would help the airline save on interest cost.

The NCDs would carry an interest rate of 9.5 per cent.

First Published: Wed, October 10 2012. 00:07 IST