Air Deccan raises 100 M Dollars through innovative financial deal

Bangalore, Oct 13 (UNI) Low Cost Airliner Air Deccan today announced striking of an innovative financial deal with two international bankers to raise 100 million dollars for its working capital over the next 15 months.

The amount, approximately Rs.450 crore would be split into four tranches and the first tranche has already been received, Air Deccan Director (Finance) Mohan Kumar told newsmen here today.

In a tele press conference that was multicast to several cities Mr Mohan Kumar and Air Deccan Managing Director G R Gopinath said that the low cost airliner had assigned supply aircraft of future aircraft in favour of a special purpose company funded by the two banks--Investec Bank of UK and HSH Nord Bank AG of Germany. Air Deccan's position to acquire the 60 aircraft from AirBus over the next six to seven years remained unchanged.

However in the event of Air Deccan not taking delivery of aircraft for which it had placed orders, the Special Purpose Company, headquartered in Cayman Islands would have the right to market the aircraft and satisfy the pre delivery payment bankers in India--State bank of India, Punjab National Bank and Union bank of India. These banks have funded Air Deccan to pay the necessry PDP to Air Bus industries Capt. Gopinath said the ''deal will go a long way to ensure Air Deccan's financial stability and insulating us from the turbulence in the domestic aviation industry, even as we aggresively pursue our growth and expansion plans''.

Admitting that overcapacity had been created in certain routes due to operations by multiple players in the sector, Capt Gopinath said over a period of years the market would stabilise once the pricing was stablised.

Mr Gopinath said the deal was a win win for all partiues concerned with the airliner getting 100 million dollars cash flow straight to its bottom line and also opened a relationship with international banks, which would help funding of ordered aircract.

These banks have now ensured an assured return on their investment irrespective of Air Deccan's performance and also an opportunity to syndicate financing of all 60 Air Bus A320s amounting to US dollars two billion.

UNI VK TS1330