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Jet to approach lenders with fresh funding proposal
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SME Times News Bureau | 23 Apr, 2019
Temporarily grounded Jet Airways is expected to make yet another plea
for an interim funding of at least Rs 250 crore to its lenders to
restart bare minimum operations till May 10.
The development
assumes significance as the lenders have called for binding bids from
potential investors by May 10 and have been unwilling to extend any
further fund infusion into the airline, despite holding pledged shares
of the promoter and appropriate collateral required for fresh funding.
"The
airline management is expected to formally approach lenders once more
with a request of an interim funding tranche," an airline insider told
IANS from Mumbai.
"These funds are expected to be used to re-start operations as soon as possible with around 3-4 aircraft and till May 10."
The
development assumes significance as lenders have asked eligible parties
to send in their binding bid proposals for stake sale in the airline.
However,
such a move might not yield much, feel banking industry insiders as
legally the lenders cannot give any interim funding to the airline which
already owes around Rs 8,000 crore.
Industry estimates have placed the total debt excluding liabilities to vendors and employees at more than Rs 11,000 crore.
The figures include interest accrued on lenders loans, external commercial borrowings and non-convertible debentures (NCDs).
Earlier,
the airline had put forth a plan for interim funding to the consortium
of Indian lenders worth Rs 983 crore. But this plan was rejected.
Consequently,
on April 17, Jet was forced to announce a temporary suspension of all
flight services as it was unable to maintain even bare minimum
operations.
Prior to temporarily suspending all flight services,
Jet had already folded up most of its operations due to grounding of
around 90 per cent of its fleet by lessors, as its consortium of lenders
refused to extend loans to the airline, despite co-signing the
resolution plan, after multiple unilateral iterations from their end.
On
its part, Jet in a regulatory had said that the SBI told the airline
that consortium of lenders are unable to consider the private carrier's
request for critical interim funding.
"Since no emergency funding
from the lenders or any other source is forthcoming, the airline will
not be able to pay for fuel or other critical services to keep the
operations going," the filing said.
"Consequently, with immediate
effect, Jet Airways is compelled to cancel all its international and
domestic flights. The last flight will operate today (April 17)."
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