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HindustanTimes Sat,01 Nov 2014

AI to raise $ 1 bn working capital from overseas markets

PTI  Mumbai, April 15, 2012
First Published: 12:08 IST(15/4/2012) | Last Updated: 12:10 IST(15/4/2012)

Two days after the government okayed a turnaround plan, the cash-strapped national carrier Air India invited merchant bankers to raise working capital loans up to $ 1 billion from overseas markets.

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The move follows the government allowing AI to borrow up to $ 1 billion annually through the external commercial borrowing (ECB) route.

The airline has floated an "invitation of offers" for raising funds through the ECB route. It is seeking to raise the funds for at least one-year period at either a fixed or floating rate, according to the offer document. Besides, Air India is also open to any innovative structured financing package which reduces the financing cost, says the document.

Last Thursday, the government approved the much-awaited turnaround plan and a financial restructuring plan (FRP) which involves a Rs. 30,000-crore equity infusion by the government over the next eight-year period and a debt recast (CDR) of Rs. 21,200 crore.

The financial restructuring plan will provide relief to Air India from its debt servicing obligations on working capital loans in the form of a substantial reduction in interest outlays, while giving it the necessary time to improve its operational efficiency.

The airline's current outgo on interest payment to the banks is Rs. 2,400 crore, which will come down drastically.

Air India signed four agreements with the SBI-led 19 bank consortium on March 31 -- the master restructuring agreement, the working capital facility agreement, the appointment of facility agent agreement and the appointment of trustee agreement, under the turnaround and CDR plans.

A highlight is the conversion of about Rs. 11,000 crore of working capital loans into long-term debts, which will lead to a saving of about Rs. 1,000 crore this fiscal itself.

Besides, the airline will issue government-guaranteed non-convertible debentures (NCDs) worth Rs. 7,400 crore to its lenders, like financial institutions, banks, LIC and EPFO. The NCDs would be used to repay part of the airline's close to R.s 21,200 crore working capital loans.

AI has outstanding loans and dues worth Rs. 67,520 crore.


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