Air India's Rs 20,000-cr debt recast by June-end

New Delhi/Mumbai: Air IndiaAir India said on Thursday it is in "final stages" of discussions with banks for restructuring Rs 20,000 crore of debt and expects to complete the formalities by end-June.
According to the plan, a portion of the debt will be converted into long-term loans at fixed rates of interest with the remainder being converted into cumulative redeemable preference shares which will be redeemed after 15 years.
For banks, to avoid a default from Air India-- reeling under accumulated loss of nearly Rs 16,000 crore over three years -- the only option is to agree to restructuring lest they will be further burdened with a huge amount of non-performing loans.
The restructuring will help the airline save at least Rs 600 crore in interest costs and boost liquidity, spokesman K. Swaminathan wrote in an email response to a Reuters query.
Air India has set a target to enhance its revenues by Rs 5000 crore and also to reduce costs by Rs 4,000 crore a year, post the restructuring, according to its website.
Of the 26 lenders, at least four with whom Reuters spoke expressed concern about the restructuring package.
"They are asking for large number of concessions, longer period, more amount to be converted into cumulative redeemable preference shares and at lesser rate of interest," said one of the lenders, who did not wish to be identified.
19/05/11 Reuters/Business Standard

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Categories: Air India May 2011