The Air India (AI) board on Thursday approved allotment of preference shares worth Rs 7,500 crore to its lenders - effectively making banks stakeholders in the state-run carrier.
Hindustan Times had first reported on September 22 that Air India had decided to convert a part of its working capital loan into cumulative preference share capital.
"The Board approved the rearrangement of authorised share capital by issue of preference shares worth Rs 7,500 crore which are proposed to be allotted to the lenders of the working capital as part of the Financial Restructuring Plan (FRP)," AI said in a statement on Thursday.
The exact stake that banks would own in AI is not clear.
As reported by HT, AI would save as much as Rs 1,000 crore in its annual interest burden with this move to restructure working capital loans by issuing preference shares.
A total of 21 banks have exposure in the national carrier.
The Board's decision still needs to be cleared by the union government. "A cabinet note is being moved by the ministry of civil aviation for the purpose of equity infusion in AI and for approving the FRP," AI said.
"State Bank of India has approached Reserve Bank of India for certain additional dispensations in the provisioning norms," the airline added in its statement.
The airline board meanwhile appointed a four-member panel to finalise the selection of chief operating officers for AI and its low-cost subsidiary, AI Express. Applications are in, and interviews are likely to start soon.