Domain-B, Air India and its lenders group have finally signed a financial
restructuring plan that would help the beleaguered national carrier save hundreds of crores of rupees in working capital expenses and give a big boost to its precarious finances. The debt restructuring plan involves conversion of about Rs10,500 crore of the airline's Rs14,000 crore working capital loans to long-term debt, carrying an annual interest of 11 per cent. Part of the working capital of about Rs3,500 crore will also be restructured as cash credit arrangement. Air India will also be issuing Rs7,400-crore worth of non-convertible debentures (NCDs), guaranteed by the government, to investors, which would be used to repay loans. The first year interest would accumulate in a funded interest term plan, leading to savings of about Rs1,000 crore in 2012-13 itself, sources at the banks said. In all, Air India signed four agreements with the consortium of lenders led by the State Bank of India (SBI) late last evening after the lenders approved the comprehensive operational turnaround plan along with a financial restructuring, civil aviation minister Ajit Singh said. The agreements include a master restructuring agreement, working capital facility agreement, appointment of facility agent agreement and appointment of trustee agreement, airline sources said. Once the agreements are operational, the Air India management will be free from the obligation of debt servicing of its working capital, and get more time to focus on improving operational efficiencies. A group of ministers will be monitoring the preparation of the turnaround plan and the financial restructuring plan, according to Ajith Singh. Implementation of the financial restructuring, however, is still awaiting cabinet approval as it involves infusion of fresh capital. The cabinet is expected to approve the plan some time next week. The government has so far infused a total of Rs3,200 crore in Air India's equity, including Rs800 crore in 2009-10, Rs1,200 crore in 2010-11 and another Rs1,200 crore in 2011-12. Air India has outstanding loans and dues worth Rs67,520 crore, including Rs21,200 crore of working capital loan, Rs22,000 crore long-term loan contracted for fleet acquisition and Rs4,600 crore vendor dues besides an accumulated loss of Rs20,320 crore. Air India also proposed an infusion of Rs30,231 crore in fresh equity capital by the government between fiscal years 2012 and 2021.Source: Domain-B.COM
restructuring plan that would help the beleaguered national carrier save hundreds of crores of rupees in working capital expenses and give a big boost to its precarious finances. The debt restructuring plan involves conversion of about Rs10,500 crore of the airline's Rs14,000 crore working capital loans to long-term debt, carrying an annual interest of 11 per cent. Part of the working capital of about Rs3,500 crore will also be restructured as cash credit arrangement. Air India will also be issuing Rs7,400-crore worth of non-convertible debentures (NCDs), guaranteed by the government, to investors, which would be used to repay loans. The first year interest would accumulate in a funded interest term plan, leading to savings of about Rs1,000 crore in 2012-13 itself, sources at the banks said. In all, Air India signed four agreements with the consortium of lenders led by the State Bank of India (SBI) late last evening after the lenders approved the comprehensive operational turnaround plan along with a financial restructuring, civil aviation minister Ajit Singh said. The agreements include a master restructuring agreement, working capital facility agreement, appointment of facility agent agreement and appointment of trustee agreement, airline sources said. Once the agreements are operational, the Air India management will be free from the obligation of debt servicing of its working capital, and get more time to focus on improving operational efficiencies. A group of ministers will be monitoring the preparation of the turnaround plan and the financial restructuring plan, according to Ajith Singh. Implementation of the financial restructuring, however, is still awaiting cabinet approval as it involves infusion of fresh capital. The cabinet is expected to approve the plan some time next week. The government has so far infused a total of Rs3,200 crore in Air India's equity, including Rs800 crore in 2009-10, Rs1,200 crore in 2010-11 and another Rs1,200 crore in 2011-12. Air India has outstanding loans and dues worth Rs67,520 crore, including Rs21,200 crore of working capital loan, Rs22,000 crore long-term loan contracted for fleet acquisition and Rs4,600 crore vendor dues besides an accumulated loss of Rs20,320 crore. Air India also proposed an infusion of Rs30,231 crore in fresh equity capital by the government between fiscal years 2012 and 2021.Source: Domain-B.COM