National Aviation Company of India Ltd, the holding company of Air India, has secured a bridge loan of $475 million (Rs 2,137 crore) from Standard Chartered Bank at an overall rate of 350 basis points above Libor. The loan is to part finance the purchase of three Boeing 777-300 ER aircraft. The airline has already received the first of the three aircraft in March this year. The remaining two will be delivered by the end of May and July respectively. “It is a bridge loan taken for six months against the security of aircraft. This loan will be re-financed with a delivery finance loan in the next four to six months, which would be a cheaper loan,” said a senior official in Air India. NACIL had floated a tender on April 6, 2010 inviting offers for long-term loan funds for financing the purchase of three B777-300 ERs and one spare engine for up to $475 million, scheduled for delivery in 2010. According to the tender document, US ExIm Bank's final commitment for the delivery financing has already been received. The document said the Government has approved the provision of the Government of India guarantee to support the financing for the project cost.
“However, NACIL would prefer to obtain the GoI guarantee to the minimum extent to save on guarantee cost”. The financing for first 17 aircraft had been tied up in three tranches of seven, three and seven aircraft. According to the document, NACIL has already taken delivery of these aircraft.
The above article was extracted from Skyline updates of Skyline College. Skyline College is amongst the top MBA and BBA institutes in Delhi, Gurgaon (NCR).
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