The debt restructuring plan, worked out by a consortium of banks, will give beleaguered Kingfisher Airlines a relief of Rs 1,644 crore. The debt of the country's second largest carrier stands at Rs 7,651 crore, which after restructuring will come down to Rs 6,007 crore. Part conversion of debt into equity and additional disbursement of funds by banks are part of the restructuring plan.
The RBI had cleared airlines' debt restructuring proposal in September 2010 as the airline industry was reeling under the impact of economic recession and falling passenger traffic. This restructuring will help the companies reduce their interest burden and curtail losses.
As part of the restructuring, Kingfisher Airlines' Rs 4,263 crore of term loans has been converted into compulsorily convertible preference shares (CCPS) and cumulative redeemable preference shares (CRPS). Of this, Rs 750 crore will be converted to CCPS and Rs 553 crore to CRPS.
