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Govt comes to rescue of Spicejet, may ask banks to give loans

The measures come with a rider that the beleagured airline will commit capital infusion at the earliest

Press Trust of India  |  New Delhi 

Coming to the rescue of the crisis-ridden budget airline SpiceJet, the Civil Aviation Ministry today said it may request Indian banks/financial institutions to extended loans of upto Rs 600 crore to the airline as part of measures to keep the carrier functional.

Besides, it will also request the Finance Ministry to permit external commercial borrowing (ECB) for working capital as special dispensation, a Ministry release said here.

These and many more suggestions, have been approved by Civil Aviation Minister Ashok Gajapathy Raju after due consideration as a shutdown would have been a major setback to the aviation sector, it said.

The measures, however, come with a rider that the beleagured airline will commit capital infusion at the earliest.

The steps came a day after SpiceJet's Chief Operating Officer Sanjiv Kapoor, along with Sun Group CFO S L Narayanan, met Raju and DGCA Prabhat Kumar and sought the government's help to overcome the crisis.

"Indian banks may be requested to give some working capital loan based on the assurances of the promoter. Banks or financial institutions to lend up to Rs 600 crore backed by a personal guarantee of the Chairman, SpiceJet," the release said.

This should be paid immediately after securing the long- term investment which will take around eight weeks to consummate, it said.

In addition, the Ministry of Finance will be requested to permit ECB for working capital as special dispensation as was done in the 2012 to help the airline wriggle out of the financial morass.

At the same time, the airline, with total liabilities standing at Rs 2,000 crore, including dues to the public sector oil firms and the Airports Authority of India (AAI), may get credit facility for upto 15 days from the oil firms and AAI, the government said.

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First Published: Tue, December 16 2014. 21:31 IST