New Delhi: Embattled carrier Jet Airways has defaulted on repayment of a loan of $140 million borrowed from HSBC Bank, ‘Business Standard’ has reported.
Payment on the external commercial borrowing that was due Thursday was delayed, the airline informed, due to temporary liquidity constraints. The airline said it was in talks with the bank to resolve the issue.
Jet was to repay the first tranche of $31 million March 11. The second instalment of $109 million was due Thursday. The airline failed to pay both tranches.
Jet Chairman Naresh Goyal had stepped down following pressure from lenders recently. Lenders had committed to provide Rs 1,500 crore in an emergency loan to tide over the financial crisis.
Jet and HSBC had signed the loan deal in January 2014. The $140-million loan was drawn for five years with bullet repayment obligations at the end of the fifth year. The loan was guaranteed by Etihad Airways which now owns 12 per cent in Jet.
Jet, in a letter to HSBC March 11, said had cited severe liquidity crunch and stated that it was working on a bank-led resolution plan for revival. The plan, it has told HSBC, was in the final stages of seeking regulatory and corporate approvals, and that pending these approvals, the company was “unable to repay tranche A of $31 million”.