The new debt availed by the Tata Group will be used to refinance Air India’s debt availed at over 10%, sources said. It is not known if Tatas have drawn a loan from HDFC Bank yet. Tata Group, SBI, BoB and HDFC Bank did not respond to ET’s query as of press time on Friday.
Tata Sons on Thursday availed of a Rs 10,000-crore loan from SBI and a Rs 5,000-crore loan from BoB, one of them said. The loans are unrated, unsecured, and pegged at 4.25% [interest rate] annually, the person said.
“The interest rate and other terms of the loan offered by all banks were almost similar. It appears that Tata Group has chosen to avail funding from a few banks,” said a banker aware of the developments. Tata Sons-promoted Talace has acquired Air India, offering Rs 18,000 crore that include Rs 15,300 crore for the carrier’s existing debt and Rs 2,700 crore cash to be paid to government.
Last month, Tata Group had received sanction letters from at least 12-15 banks, offering about Rs 35,000 crore to finance the debt of Air India. The loans sanctioned by banks were in response to Tata Group seeking Rs 23,000-crore one-year loan, as reported earlier. Large commercial banks such as SBI, BoB, Punjab National Bank, Union Bank of India and HDFC Bank have approved credit limits in the range of Rs 3,000 crore to Rs 12,000 crore to Air India, sources said.
The deal with the government does not include land and buildings. As per the agreement, Tata Sons will retain all the employees of Air India at least for a year. Air India has a fleet of 117 aircraft. Tata operates Vistara in partnership with Singapore Airlines and AirAsia India in partnership with Malaysia’s AirAsia Bhd.
Of the Rs 23,000 crore that Tata proposed to raise, Rs 18,000 crore was for acquisition of Air India, and Rs 5,000 crore for its working capital.