Covid-19: MIAL is heading towards debt restructuring under the special window of the RBI
Lenders can take Mumbai International Airports (MIAL), an entity of the GVK Group, for debt restructuring under the RBI’s special window for sectors and businesses affected by Covid-19. A senior executive at a private bank said that due to the pandemic, MIAL needed restructuring.
“We will have to wait for the recommendations of the Kamath panel. Then the lenders will take an appeal on the restructuring. The airport is one of those businesses that needs to be restructured, ”said the executive.
MIAL has already made use of a moratorium on reimbursements as part of the RBI regulatory measures. The RBI has formed a panel chaired by KV Kamath to advise on debt restructuring for corporate borrowers facing strains due to the pandemic. The panel should suggest industry-specific parameters to ensure genuine cases arise and get prompt assistance.
The total rated bank loan facility stood at Rs 9,781.7 crore, according to CRISIL. In 2017, the airport infrastructure company also restructured its loans worth over Rs 10,600 crore.
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A senior public sector official said both airports’ sources of revenue – leased space and selling at retail outlets – have been affected and it would take a long time to see an improvement. Reshuffling of payments (by the borrower) may be an option.
Earlier this month, the rating agency CRISIL downgraded its rating on term loans from Rs 350 crore against MIAL’s real estate deposits to “C” instead of “B”.
CRISIL also downgraded the ratings of the remaining bank credit facilities, including project loans. Reviews continue to be on “Review watch with negative implications”.
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The downgrading of credit ratings for Airports Development Fund (ADF) loans reflects low visibility of cash flow relative to short-term debt service requirements. Liquidity problems have increased due to the limited generation of accumulation due to the reduction in airport operations.
In addition, there are uncertainties regarding the use of the cash balance in the escrow account due to the pending judgment in Delhi HC regarding the payment of the annual concession fee to the Airport Authority of India.
MIAL has upcoming debt service obligations of approximately Rs 65 crore on project loans by September 2020. In addition, there is limited visibility on the treatment of accrued interest of approximately Rs 147 crore for the moratorium period from March to August 2020.
State Bank of India added its share of accrued interest of approximately Rs 146 crore to the principal; the total accrued interest is around 293 crore rupees for the moratorium period, CRISIL added.