NEW DELHI: The consortium of banks that was working on the financial restructuring plan of Air India have finally approved it as per which the government will be committing a equity infusion of `30,000 crore for the next 10 years.
Air India signed four agreements with the consortium of at least 19 people on Friday evening including the master restructuring agreement, working capital facility agreement, appointment of facility agent agreement and appointment of trustee agreement.
While the cabinet approval for infusion of funds is still awaited, these agreements will become effective once the approvals come. As agreed earlier, the FRP will help give AI non-convertible debentures with government guarantee and convert `10,500 crore of the airline’s working capital in to a long-term loan with interest rate of 11 per cent. These accumulated interests would result in a saving of `1,000 crore, officials said.
The short term working capital loan of `7 000 crore will be converted into cumulative preferential shares and Air India will also get extended time to pay its debts of `14,000 crore.