JAL lenders to retain 284.9 billion yen in debt: report

BANGALORE (Reuters) - Japan Airlines Corp's (JALFQ.PK) five main bank creditors agreed to retain about 284.9 billion yen ($3.34 billion) lent to the airline, dropping their request that a government-based turnaround body purchase them, the Nikkei business daily reported.

The lenders, which include state-backed Development Bank of Japan, and Mizuho Corporate Bank, will officially approve JAL's proposed business rehabilitation plan next week, the paper said.

The plan, crafted by JAL and the Enterprise Turnaround Initiative Corp of Japan (ETIC), is centered on debt waivers totaling 520 billion yen ($6.10 billion), or 87.5 percent of the total, the paper reported.

The ETIC will officially decide on a 350 billion yen ($4.10 billion) investment in the airline on August 31 and will submit the restructuring plan to the Tokyo District Court later that day, the daily said.

Mizuho Corporate Bank and two other major banks asked the ETIC in March to purchase all of their JAL loans, but with the restructuring plan being finalized, they have decided to maintain business ties with JAL, the Nikkei reported.

JAL and the ETIC plan to repay 319.2 billion yen in debt in one go next March, including portions held by non-core lenders, by asking these lenders to rollover the loans, the paper said.

But loan amounts are expected to balloon as JAL will require more than 200 billion yen starting next fiscal year to procure equipment, the daily reported.

Loan negotiations with lenders will pick up steam starting September, but some of the lenders insist on monitoring progress on the company's turnaround efforts before agreeing to fresh lending, the Nikkei said. ($1=85.30 Yen)

(Reporting by Soham Chatterjee in Bangalore)