HYDERABAD: Even as crisis-hit Jet Airways is gearing up for a bank-led rescue package, persons privy to the developments said not all 25 lenders will participate in the Rs 1,500-crore emergency funding for the airline.
The proposed capital is expected to come from State Bank of India (SBI) and Punjab National Bank (PNB), which also have the highest debt exposure of Rs 2,000 crore each. In fact, PNB last month declared its intent to extend up to Rs 500 crore capital to revive the sinking airline, while SBI will likely fork out between Rs 500-750 crore.
However, sources indicated that banks with smaller exposure to Jet currently are unlikely to take on any more risk, other than subscribing to the airline’s fresh equity shares for a nominal value of Rs 1.
Some banks are even considering options of exiting the airline, provided they find buyers for their existing stake. But for now though, as one banker puts it, “all banks will fall in line” with the SBI’s proposal, since that’s the only option available.
On its part, SBI indicated that banks, which will now hold over 50 per cent stake in Jet, will exit by June quarter and that the process of finding investors will begin shortly.
“Unlike in the case of Kingfisher Airlines (where banks converted debt into equity), banks are committing fresh capital, which is good. But the success of the rescue package now rests on how soon Jet will find a buyer,” a senior banker told TNIE.
The proposed Rs 1,500 crore will be used to pay for lessors, who have grounded airplanes owing to non-payment of dues. “The first priority will be to honour payments and increase the fleet, so that operations are stabilised,” he added.
Sources also said appointment of a professional team is underway and is expected to be announced within this week.
Debt pile
Jet Airways borrowed from 26 lenders, including seven foreign banks, and owes them over I8,500 crore. SBI’s proposal seeking conversion of Jet’s debt into equity, besides restructuring of loans, needs approval from at least 17 banks.