A consortium of banks is considering an interim funding for debt-laden Jet Airways but a final decision is yet to be taken, Punjab National Bank MD and CEO Sunil Mehta said Friday. The bank is part of the lenders’ consortium, led by State Bank of India, that has extended loans to the debt laden airline. The lenders are discussing various options at the table to preserve the value of their assets, he said. “Of course, (the) consortium is in favour (of interim funding). It is a going concern and we would like to preserve its (airline’s) value,” he said.
About interim funding for the carrier, Mehta said, “it is too premature to tell you about that plan” and the bankers are already working on it. The SBI has taken a lead on it, and let the entire plan be worked out, he said. “Rs 500 crore that you are talking about is the interim funding but banks are looking at the long term resolution of the issues for which the plan is already in place for discussions,” he said.
He was responding to a query about the banks’ extending interim funding to Jet Airways. On February 14, the board of Jet Airways approved a Bank-Led Provisional Resolution Plan (BLPRP), whereby lenders would become the largest shareholders in the airline. Lenders are to convert part of the airline’s debt into 11.4 crore shares at a consideration of Re 1 apiece as per RBI norms. The resolution plan estimated a funding gap of Rs 8,500 crore — including proposed repayment of aircraft debt of Rs 1,700 crore — to be met by appropriate mix of equity infusion, debt restructuring, sale/sale and lease back/refinancing of aircraft, among others.
As per the plan, domestic lenders were to provide appropriate interim credit facilities to the airline. The lenders will also appoint their nominees directors on the board of airline.