Mumbai: Bankers will not extend fresh term loans to SpiceJet unless promoters bring in additional capital or provide fresh security for the loan. The government has asked banks to consider the airline's request for Rs 600 crore of funding in anticipation of fresh investment to be brought in a couple of months.
A bank official told TOI that considering the risks involved in financing a distressed airline, banks would not be comfortable with any business plan where the promoter does not bring in money. He added that if fresh funds would take time, the promoters would need to at least provide fresh security in the form of collateral.
This week banks were given a special dispensation to extend repayment period for infrastructure and other core projects where cash flows are not enough for loan repayment. But banks say that the reasoning that applies to project loans does not apply to airlines. Banks are still dealing with bad loans of over Rs 7,000 crore pertaining to Kingfisher Airlines (KFA). In case of KFA, lenders are finding themselves stuck because they have lent against intangibles such as the airline brand.
18/12/14 Mayur Shetty/Times of India
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A bank official told TOI that considering the risks involved in financing a distressed airline, banks would not be comfortable with any business plan where the promoter does not bring in money. He added that if fresh funds would take time, the promoters would need to at least provide fresh security in the form of collateral.
This week banks were given a special dispensation to extend repayment period for infrastructure and other core projects where cash flows are not enough for loan repayment. But banks say that the reasoning that applies to project loans does not apply to airlines. Banks are still dealing with bad loans of over Rs 7,000 crore pertaining to Kingfisher Airlines (KFA). In case of KFA, lenders are finding themselves stuck because they have lent against intangibles such as the airline brand.
18/12/14 Mayur Shetty/Times of India
