The government would bring in equity to the extent of year-to-year cash deficits, besides guaranteeing aircraft loans for a period of five years.
Air India is in talks with public sector banks led by State Bank of India for restructuring its working capital loan of Rs21,000 crore, a top Air India official said today.
"The turnaround plan has been presented to the lenders and is being brought in line with the 2010-2011 achievement. The plan envisages that Air India would be made EBITDA (earnings before interest, taxes, depreciation, and amortisation) positive in 2012 and cash positive by 2014. The idea is to achieve a load factor of 71 per cent on the international sector, and 75 per cent on the domestic sector," the official told PTI.
The turnaround plan seeks to convert 60% of the current working capital into long term debt of 10 years with a fixed coupon rate of 10.5 per cent, while the remaining 40% of the working capital would be converted into a cumulative redeemable preference shares carrying a fixed rate of interest of eight per cent.
The government would bring in equity to the extent of year-to-year cash deficits, besides guaranteeing aircraft loans for a period of five years.
"Air India plans to complete the exercise by the end of June 2011 after seeking the RBI nod for waiver of certain provisional norms. The restructuring is likely to result in a saving of Rs600 crore as interest on working capital. Air India is also refinancing its rupee loan of Rs5,500 crore taken from IDBI Bank in 2009, through a bond issue to be managed by the ICICI Bank which will reduce interest cost by Rs180 crore per annum," the official said.
Besides, the airline is also in the process of refinancing its $475 million bridge loan taken from Standard Chartered in April 2010 through an EXIM guarantee by Citibank.
"This is likely to result in a saving of an additional Rs100 crore. The total savings and interest cost for the year 2011-2012 is placed at Rs900 crore," the official said.
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