Dhaka, Bangladesh (BBN)- Biman Bangladesh Airlines Limited is looking for lenders to make pre-delivery payment (PDP) worth over US$ 118 million for two more Boeing aircraft, officials said.
The national flag carrier has sought the funds from financial institutions that are interested in financing full or part of the PDP of two 777-300ER aircraft. The total PDP will have to be paid to the US-based Boeing by November 15.
“We’re looking for lenders to make the PDP in time for purchasing two more Boeing aircraft,” a Biman official told BBN in Dhaka without elaborating.
A meeting of chief executives of 22 private commercial banks (PCBs) was held at the central bank in this connection on Thursday with Deputy Governor of the Bangladesh Bank (BB) SK Sur Chowdhury in the chair.
The high-profile meeting discussed financing of the PDP by Sonali Bank Limited (SBL), UK branch along with local PCBs, the officials said, adding that the central bank also assured the bankers of providing necessary support in this connection.
“The central bank will provide foreign currency support to the SBL, UK branch to clear the PDP in time for buying the new Boeing aircraft,” SK Sur Chowdhury said, adding that the government has already given 100% sovereign guarantee for the loan.
As per arrangement, the SBL, UK branch will provide $58 million to the Biman and rest of the amount ($ 60 million) will be collected by the Eastern Bank Limited (EBL) as lead arranger from local PCBs.
“We’ve already approached 22 PCBs for participation in the syndicated loan,” Ali Reza Iftekhar, Managing Director and Chief Executive Officer of the EBL, said, adding that the EBL is working continuously to manage the fund within the stipulated timeframe, set by the Boeing.
“The PCBs will provide the funds subject to approval of the board of directors,” Mr. Iftekhar said, adding that the ministry of finance, the central bank and the PCBs are now working closely to make the PDP in time.
The finance ministry has already provided sovereign guarantee to Boeing on behalf of Biman so that the global aircraft maker supplies the third and fourth aircraft in due course.
Under the sovereign guarantee, a foreign financier will get assurance that if the Biman fails to pay the money in time, the government will pay it.
During the last caretaker government’s tenure, Biman signed a deal with the US aircraft maker for procurement of 10 aircraft by 2019 at a cost of $ 1.3 billion aiming to make the airlines profitable by replacing its age-old fuel-guzzling fleet.
As part of the purchase deal, Boeing already delivered two new Boeing 777-300ER aircraft in October and November last.
Other two Boeing 777-300ERs are scheduled for delivery in April and May 2014.
The total payment for two aircraft is approximately $ 340 million which will be paid at the time of delivery of the aircraft or earlier, according to the officials.
Approximately 80 per cent of the total price will be financed by the Ex-IM Bank (Export-Import Bank of the United States), they added.
Biman was founded in 1972 as a fully government-owned entity. It was converted into a public limited company during the tenure of the last caretaker government. But its equity holding is still wholly retained by the government. There has not yet been any disinvestment of its equity to the private sector.
After witnessing some profits initially following its conversion into a public limited company, Biman went again into a red balance, its usual case throughout its long years of operations as a national airline.
The national flag carrier Biman incurred an operating loss of BDT 5.16 billion in 2011, though it made profits during the tenure of the last caretaker government.
BBN/SSR/AD-02Nov12-12:20 pm (BST)
