Jet Airways set to get Rs 500 crore emergency funding from SBI, PNB

New Delhi: State-led Jet Airways will receive a Rs 500-crore emergency fund from government-run State Bank of India and Punjab National Bank, on conditions that others in the consortium of lenders show no objection, sources said. The infusion will allow the cash-strapped carrier to carry on its operations until the lenders figure out how to reorganise the airline's Rs 8,000-crore plus debt.

Besides SBI, PNB, no other lender to step in

"Only SBI and PNB have agreed to step in and provide the loans," said the source aware of the matter. "None of the other lenders is willing to lend more," said this source, who also said that the fresh debt is proposed to be given first priority in the event of loan recovery.

"Since it will be treated on a higher pedestal on the debt waterfall, it needs an okay from other lenders," the person added.

Jet owes SBI, the carrier's largest lender, close to Rs 2,000 crore. The state-run lender is expected to offer a majority of the emergency funding, while details are yet to be finalised, the source said.

As per SBI's provisional resolution plan earlier this month, lenders might convert a part of the debt into 114 million shares by paying a Re 1 token each, based on the restructuring guidelines under the Reserve Bank of India (RBI). This will provide lenders a majority 50.1 percent shareholding in Jet.

However, the other lenders have not yet approved the plan. While the emergency funding is considered crucial, with a recast proposal unlikely to be decided soon.