Air India lenders offer to loan Rs 35,000 crore to Tata Group's Talace: Report

Air India lenders have reportedly offered to loan Rs 35,000 crore to Tata Group's Talace, which - on December 20 - received Competition Commission of India (CCI) nod to acquire the national carrier.

Lenders will loan the amount at a weighted-average yield of 4.25 percent, the rate at which the sovereign borrows for a year, The Economic Times reported, citing sources.

As per the report, Talace had earlier invited bids for a one-year general purpose loan of Rs 23,000 crore from Air India's existing lenders.

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"It is an overwhelming response considering that the loan is unrated and unsecured and yet the pricing is near sovereign," an executive at one of the lenders told the publication.

Moneycontrol could not independently verify the report.

Lenders, including State Bank of India (SBI), Bank of Baroda, Punjab National Bank and Union Bank of India, have approved credit limits between Rs 12,000 crore to Rs 3,000 crore, as per the report.

Tata is likely to inform all lenders about the allocation in the first week of January and draw sanctioned limits between January 10 and 15.

Also read | Air India handover to Tata Group delayed by a month till January

The new debt will replace the earlier credit raised by Air India at 9-10 percent, the report said.

In October, the government accepted the highest bid made by a Tata Sons companyof Rs 18,000 crore for 100 percent equity shares of Air India and Air India Express along with its 50 percent stake in ground-handling company AISATS.

Tata would pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline’s debt.

The total debt of Air India as on August 31 stood at Rs 61,560 crore. Debt which will be taken over by Tatas will be Rs 15,300 crore while Rs 46,262 crore will remain with Air India Asset Holdings Ltd, which is a special purpose vehicle created to retain the non-core assets, land and the debt of Air India which Tata will not be taking on.

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