Tatas chooses SBI, two other banks to finance Air India’s old debt

The Tata Group has chosen State Bank of India, Bank of Baroda and HDFC Bank as preferred bankers to Air India, the largest international airline in the country it took over as government on Thursday, people familiar with the news said. case.

On Thursday, Tata Sons benefited from a loan of Rs 10,000 crore from SBI and a loan of Rs 5,000 crore from BoB, one said. Loans are unrated, unsecured and indexed at 4.25% [interest rate] annually, the person said.

The new debt used by the Tata Group will be used to refinance Air India debt that is more than 10% used, sources said. It is not known whether Tatas has yet taken out a loan from HDFC Bank. Tata Group, SBI, BoB and HDFC Bank did not respond to ET’s query as of press time Friday.

Last month, Tata Group had received sanction letters from at least 12 to 15 banks, offering around Rs 35,000 crore to fund Air India’s debt. The bank-sanctioned loans were in response to the Tata Group requesting a one-year loan of Rs 23,000 crore, as previously reported. Major commercial banks such as SBI, BoB, Punjab National Bank, Union Bank of India and HDFC Bank have approved credit limits ranging from Rs 3,000 crore to Rs 12,000 crore to Air India, sources said.

“The interest rate and other terms of the loan offered by all the banks were almost similar. It seems that the Tata group chose to finance itself with a few banks,” said a banker familiar with the developments. Talace, promoted by Tata Sons, acquired Air India, offering Rs 18,000 crore which includes Rs 15,300 crore for the carrier’s existing debt and Rs 2,700 crore in cash to be paid to the government.

Of the Rs 23,000 crore Tata offered to raise, Rs 18,000 crore was for the acquisition of Air India and Rs 5,000 crore for its working capital.

The agreement with the government does not include land and buildings. Under the agreement, Tata Sons will retain all Air India employees for at least one year. Air India has a fleet of 117 aircraft. Tata operates Vistara in partnership with Singapore Airlines and AirAsia India in partnership with AirAsia Bhd of Malaysia.

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