Govt banks help DIAL bridge funding gap

Airport developer to raise over Rs 1,800 crore by pledging revenues from passenger charges. Delhi International Airport Ltd (DIAL), the five-company consortium led by Bangalore-based infrastructure conglomerate GMR Group that is upgrading Delhi airport, has managed to raise over Rs 1,000 crore to meet its financial obligations for the Rs 8,890-crore project. DIAL has raised Rs 1,100 crore from five public sector banks and is in advanced discussions with Punjab National Bank (PNB) to mop another Rs 727 crore. The project had run into trouble after DIAL failed to mobilise an expected Rs 3,110 crore against land leases for hotel and commercial projects near the airport complex, owing to poor market conditions. The loans have been sanctioned by pledging the money DIAL will receive from the Airport Development Fee (ADF) the government allowed it to charge passengers in February 2009. The government allowed DIAL to levy ADF at the rate of Rs 200 per departing domestic passenger and Rs 1,300 per departing international passenger. The net present value (NPV) of this levy was Rs 1,827 crore. The coupon rate for the three-year loan is 10.5 per cent. Sources said all five banks have agreed to extend loans and discussions with PNB are almost complete. At this rate, the lender will get Rs 2,274 crore over the next three years, including interest of Rs 447 crore ( Rs 2,274 crore minus Rs 1,827 crore). The money will be treated as DIAL’s equity as part of the financing plan that the government approved. The ADF is not shared with the government. Otherwise, under an operating agreement, the airport developer is required to share 46 per cent of its revenues with the government. In approving an ADF, the government has, in effect, forfeited its right to additional income. When it approved the ADF, the government had stated that DIAL had exhausted all other funding options Originally, promoters GMR and other partners had committed to putting in Rs 840 crore as equity and raising Rs 3,110 crore from the real estate project, which was to be treated as quasi-equity. The remaining project cost of Rs 4,940 crore was to be raised through loans from domestic banks and external commercial borrowings (ECBs). Once the expected amount from the real estate project failed to materialise, however, banks asked DIAL’s promoters to increase their equity as a pre-requisite for accessing these loans. DIAL now expects to raise around Rs 1,000 crore as deposit from the real estate project. Under the agreement, the company will open an escrow account through which banks will have first charge. The money will be repaid in three years. Sources said the GVK-led consortium that is upgrading the Mumbai International Airport Ltd (MIAL) is also in advance discussions with several banks to securitise Rs 1,543 crore worth of ADF. As with DIAL, the government had allowed MIAL to levy Rs 100 per domestic passenger and Rs 600 per departing international passenger for four years. The net present value of this income is Rs 1,543 crore for MIAL.