New Delhi, March 31: Air India's financial
restructuring plan has been approved by a consortium of banks that may enable
the ailing carrier save several hundred crores in the first year itself.
Air India signed four agreements with the SBI-led consortium late
last evening. These were on master restructuring, working capital facility,
appointment of facility agent and appointment of trustee, airline officials
today said.
"The cabinet approval for infusion of funds is still awaited and
is expected some time next week," the officials said.
The implementation of the restructuring plan will begin after the
Union cabinet approves additional equity infusion into the airline, they
said.
One of the major highlights of the agreements include conversion
of about Rs 10,500 crore of the airline's working capital into long-term loan,
carrying an annual interest of 11 per cent.
"The first year interest will accumulate in a funded interest
term plan," they said, adding these would lead to substantial savings of about
Rs 1,000 crore in 2012-13 itself.
In addition, non-convertible debentures (NCDs), guaranteed by the
government, worth Rs 7,400 crore would be issued and subscribed by the
investors, the officials said, adding proceeds from the NCDs would be used to
repay the lenders. Also, part of the working capital of about Rs 3,500 crore
will be restructured as cash credit arrangement.
Under the rejig plan, Air India has proposed that the government
should infuse equity of about Rs 30,231 crore between 2012 and 2021.
It also includes the conversion of a short-term working capital
loan of Rs 7,000 crore into cumulative preferential shares, or NCDs, and giving
the carrier more time to repay a debt amount of around Rs 14,000 crore.
The government has so far infused equity of Rs 800 crore in
2009-10, Rs 1,200 crore in 2010-11 and another Rs 1,200 crore in 2011-12.
The carrier has outstanding loans and dues worth Rs 67,520 crore,
of which Rs 21,200 crore is working capital loan, Rs 22,000 crore long-term loan
on fleet acquisition, Rs 4,600 crore vendor dues, besides an accumulated loss of
Rs 20,320 crore.
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