Forum Gandhi Jet Airways has defaulted on a tranche payment of $31 million to HSBC that was due on March 11.
The financially troubled carrier owes $140 million in total to HSBC. It is supposed to pay off this amount by the end of the month but analysts said unless the company gets a fresh fund infusion quickly it may default again.
In March 2014, Jet had availed of a $140-million loan from HSBC as External Commercial Borrowing (ECB) for five years. According to the agreement, the airline had to repay the dues in two tranches. Tranche A worth $31 million was due on March 11 and tranche B worth $109 million is due on March 28.
Jet informed HSBC in a letter it was unable to repay tranche A of the debt. “Jet Airways has been facing severe liquidity constraints and is working through a Bank-Led Provisional Resolution Plan (BLPRP), drawn with the consent of all the stakeholders, (and) is in advanced stages of seeking various regulatory and corporate approvals for the same to be implemented,” it wrote.
BusinessLine had reported earlier this week that according to a proposed MoU, Jet would have to pledge 15 per cent of the total share capital of Jet Privilege Pvt Ltd in favour of HSBC as primary/first lien security for the $150-million facility (current outstanding of approximately $140 million) extended by HSBC to Jet Airways under the terms of the 2014 agreement.
Along with this, ₹750 crore in interim financing by Etihad and another ₹750 crore by the lenders will be put in as interim funding.
According to sources close to the development, a 34.9 per cent stake in Jet Privilege is likely be pledged equally to Etihad and the lenders to secure the interim funding.