Banks approve Air India’s $3.5 bln financial restructuring plan

Posted: April 2, 2012 in Airlines, Asia, India
Tags: , , , , , , ,

In a big boost to its precarious financial position, Air India’s Financial Restructuring Plan (FRP) has been approved by a consortium of banks, which may enable the ailing carrier save substantially in the first year itself.

Indian Government Cabinet approval for the deal is expected some time next week

Indian Government Cabinet approval for the deal is expected some time next week

As part of the FRP, Air India signed four agreements with the SBI-led consortium late last evening.

These were the Master Restructuring Agreement, Working Capital Facility Agreement, Appointment of Facility Agent Agreement and Appointment of Trustee Agreement, an airline official told PTI on Saturday.

“The Cabinet approval for infusion of funds is still awaited and is expected to be received some time next week,” the official said.

Implementation of the FRP would begin after the Union Cabinet approves additional equity infusion into the airline.

Officials of at least 19 banks were present at the signing ceremony held here.

One of the major highlights of the agreements include conversion of about Rs 10,500 crore of the airline’s working capital in to long-term loan, carrying an annual interest of 11 per cent.

“The first year interest would accumulate in a funded interest term plan,” the official 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, and proceeds from the NCDs would be used to repay the lenders. Further, a part of the working capital of about Rs 3,500 crore would be restructured as cash credit arrangement.

Continued here at The Indian Express….

Press Trust of India
New Delhi, Apr 02 2012


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