Government will continue to pay lenders through Spv according to repayment period, says Dipam secretary

After Tata Sons won the bid for the national carrier, the Center said on Friday that the government would continue to pay Air India lenders through the Special Purpose Vehicle (SPV) depending on the repayment period.

As part of the deal, the Tata group will take over the debt of Rs 15,300 crore and pay Rs 2,700 crore in cash. The remaining debt of Rs 44,000 crore will be transferred to a government SPV, which already carries Rs 22,000 crore of debt transferred earlier. The share purchase agreement allows the Tata to merge their airlines and the government intends to complete the transaction by December.

In an exclusive interview with Sapna Das, Tuhin Kanta Pandey, secretary of DIPAM said: “The repayment to the lenders will be taken care of. One of the ways is the novation of covered bonds. If Air India pays the lenders with a government guarantee, the lenders can agree that Air India Assets Holding Ltd (AIAHL) will pay it to the lenders with the government guarantee. It is therefore an innovation. So this means that the Indian government will continue to pay lenders through AIAHL per repayment period.

He said that around Rs 44,000 crore of liabilities less assets will go to AIAHL: “There is around Rs 46,000 crore of debt that will be transferred to SPV. Also, there are Rs 14,000 crore of assets going there and there will be excess liabilities. So on a net-net basis, approximately Rs 44,000 crore of liabilities less assets will go to AIAHL. “

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