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Jet Airways secures Rs.2,050 crore loan from PNB

By HindusthanSamachar | Publish Date: Mar 12 2019 11:02AM
Jet Airways secures Rs.2,050 crore loan from PNB
New Delhi, Mar.12 (HS): Cash-strapped Jet Airways has, reportedly, secured funds worth Rs 2,050 crore from public sector bank, Punjab National Bank (PNB) in a bid to provide temporary support to the company. Meanwhile, the airlines raised foreign currency term loans worth Rs 1,100 crore and a non-fund based credit facility of Rs 950 crore from PNB. However, this credit has been raised in two instalments through separate agreements with PNB. Under one agreement, the airline received credit of Rs 1,050 crore, including a term loan worth Rs 350 crore and a non-fund based facility of Rs 700 crore, a report said. But through the second agreement came credit worth Rs 1,000 crore, including a term loan of Rs 750 crore and a non-fund based facility of Rs 250 crore. It is unclear how the carrier will use this credit. While speculation is that the funds will be used for its working capital needs, sources told in company the airline wants to use the money to clear dues to aircraft lessors and pay staff salaries. This fund infusion may prop up Jet Airways'' credit rating and help resume flights that have been cancelled ever since at least 49 of its planes were grounded in February. "The loan has been raised in dollars at a stronger rupee as compared to the value of the rupee now. So, there is a cost arbitrage, which could help the company repay larger rupee loans," a source earlier said. When contacted, corporate communication chief of the Jet Airways, Ragini Chopra refused to comment on development. To avail of the loan, Jet Airways had to create a trust and retention account (TRA) through a tripartite agreement with PNB and ICICI Merchant Services. This mechanism is used to protect banks and lenders against defaults by insulating the project''s cash flows. It is worthwhile to mention here that Jet Airways had a debt of Rs 9,600 crore as of December 31. It has incurred a total loss of Rs 3,200 crore in the nine months through December, with a negative net worth of Rs 10,370 crore. Hindusthan Samachar/Pramod
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