Air India's debt recast plan has been rejected and the struggling carrier will now have to start from scratch. Sources say that the bone of contention was the cumulative redeemable preference shares.
Post the meeting, SBI chairman Pratip Chaudhari said that the Air India management, SBI and SBI Caps will meet within this week itself to see what are the various options that can be worked out. "We have agreed to work out another restructuring for both Air India and the Civil Aviation industry together. Within this week itself, all the banks are meeting at the highest level along with SBI Caps, who are advisors to Air India, and maybe Air India management also to see that what are the various options that can be worked out," he said.
This comes as a great surprise because SBI Caps and SBI were actually part of this proposal, says CNBC-TV18's Aakansha Sethi. A Finance Ministry committee had recommended that there will be about Rs 28,000 crore of equity infusion in Air India over a period of time. Their debt was to be restructured, with Rs 11,000 crore of debt converted into long-term debt, Rs 7,000 crore converted into a cumulative redeemable preference shares (CRPS) and about Rs 3,500 crore converted into cash credit.
Sources say that the bone of contention is CRPS because SBI does not want to convert debt into CRPS, which lead to other lenders saying that until SBI converts into CRPS they will also not convert.
17/01/12 CNBC-TV18/moneycontril.com
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