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. Air India is also open to any innovative structured financing package which reduces the financing cost, the document says. Last Thursday, the government approved the much-awaited turnaround plan and a financial restructuring plan (FRP) that 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 banks 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 Rs 21,200 crore working capital loans. Air India has outstanding loans and dues worth Rs 67,520 crore.