The Naresh Goyal funded airline will be borrowing a foreign currency term loans worth ₹1,100 crore and a non-fund based credit facility of ₹950 crore from PNB, as per various media reports.
As per the loan agreement, the loan will come under two separate tranche with different lending rates. Jet Airways will receive credit facility of ₹1,050 crore, along with term loan of ₹300 crore in dollars (on a notional rate of ₹67 per dollar) and a non-fund based credit facility of ₹700 crore. The second tranche includes a credit facility of ₹1,000 crore with a term loan of ₹750 Crore and a non-fund based credit facility of ₹250 crore.
Both the term loan has a five year term for repayment with different lending rates. The term loan of ₹750 crore has been given at 12-month LIBOR plus 5%, with yearly reset. While the term loan of ₹300 crore has a six month LIBOR plus 3.5%, with 6 month reset period.
As per the sources, the capital will be used to meet the its daily capital expenditures. Jet Airways has been going through a big financial crises. About 40% of its fleet has already been grounded due to non-payment of dues to the lessors. Now, with the fresh capital airline plans to pay its dues to lessor and due salaries to pilots, to kick-start its flying operations again.
LIBOR( London Inter-bank Offered Rates) is average interest rate calculated by the average of interest rates submitted by the leading banks of London.
The loan to the cash-strapped airline has been given on the precondition of setting up a trust retention account (TRA) by making a triparte pact with PNB and ICICI Merchant Services Pvt. Ltd. TRA, which is a popular method used by lenders against defaulting borrower, which does not allow borrower to hide the cash inflow. For this the bank appoints a TRA agent.